Central Bank Hints at Interest Rate Hike

Bank of Korea Gov. Lee Seong-tae yesterday hinted at an interest rate hike in stressing the need for a change in monetary policy for the first time since the outbreak of the global economic crisis.

The central bank`s Monetary Policy Committee froze the benchmark interest rate, after which Lee told a news conference, “The financial market has eased much more than expected given the economic situation. Even if other leading interest rates rise, the financial market can still be considered to have eased.”

"We must keep an eye on whether low rates will keep people buried in heavy debt and create a bubble in the real estate and stock markets that cannot be explained with economic logic. If low interest rates bring excessive side effects such as a rally in the real estate market, we must change the direction of monetary policy.”

The benchmark interest rate has remained at two percent since March.

jaeyuna@donga.com