Bank of Korea Governor Lee Seong-tae said on Friday that the central bank will not immediately act when inflation rises above the BOK's target but will instead consider the overall economic conditions first.
Government data earlier this month showed South Korea's consumer prices rose an annua3.6 percent in December, above the Bank of Korea's target band of 2.5-3.5 percent for 2007-2009.
"When consumer inflation breaches our stabilisation target, we will take countermeasures after taking into consideration the expected period of higher inflation, how long it will take to affect our policy and the financial and economic conditions," Lee told an internal senior-level meeting. His remarks were released in a statement prior to the meeting. He also said the Bank of Korea will take flexible measures on its monetary policy by focusing on overall economic growth and financial market conditions, even though its main goal is to stabilise consumer inflation.
After the Bank of Korea kept the benchmark interest rate steady at 5.0 percent last week for the fifth consecutive month, Lee said the consumer price index is expected to maintain high growth throughout the first half of this year. Economists have regarded the comments as indicating the central bank sees inflation eventually stabilising after reaching its peak during the first half.
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