Most BOK board members wanted door open for further tightening – minutes

SEOUL (Reuters) – A big majority of the Bank of Korea’s board members voted to hold interest rates steady at the Feb. 23 meeting but agreed it was premature to declare an end to its tightening campaign, meeting minutes showed on Tuesday.

Four of the five board members who voted to keep the policy rate unchanged said it should leave the door open for further rate increases if needed to contain inflation, whereas the fifth member saw no need for further tightening.

“We should leave the chances open for further increases (in the policy rate) if needed on the basis of development in the domestic and global economic conditions going forward,” one member, who was not named, said at the meeting.

Governor Rhee Chang-young already disclosed at that time that the sixth member, Cho Yoon-je, dissented and voted for an increase of the policy rate by 25 basis points.

The minutes contained comments by six of the seven board members as the other member, Governor Rhee, does not vote when there is a majority formed without him.

The Bank of Korea had raised the policy rate by 300 basis points since August 2021 from record-low 0.50% to contain inflation but investors have bet the tightening was over as the economy, Asia’s fourth-largest economy, is on the brink of falling into a recession and inflation pressure is easing.

Details of the Feb. 23 policy meeting were released as investors were reducing their bets on further tightening of global interest rates as financial markets were hit hard by fears of a U.S. banking sector crisis.

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