ID :
38737
Sun, 01/04/2009 - 13:29
Auther :
Shortlink :
http://m.oananews.org//node/38737
The shortlink copeid
BOK vows to prioritize economic recovery this year
SEOUL, Jan. 4 (Yonhap) -- South Korea's central bank said Sunday it will focus
its 2009 monetary policy on bolstering the fast slowing economy and stabilizing
financial markets as inflationary pressure is expected to ease.
The Korean economy is feared to lose momentum sharply this year as the deepening
global economic downturn is widely expected to further hit exports, or the
mainstay of its growth. Most analysts predict economic growth will fall to the
1-percent range.
"The Bank of Korea (BOK) will conduct its rate policy by focusing on reviving the
cooling economy and improving fund flows as inflation is expected to show a
downward trend," the central bank said in a statement.
Since early October, the BOK has cut its key interest rate by a combined 2.25
percentage points to an all-time low of 3 percent in a bid to prop up the cooling
economy, hit by the U.S.-sparked global financial crisis.
The statement echoed BOK Gov. Lee Seong-tae's New Year's message. Lee pledged to
focus on boosting the slowing economy this year, hinting that the central bank
may carry out more interest rate cuts in 2009 to keep Asia's fourth-largest
economy from going into freefall.
The South Korean economy grew 0.5 percent in the third quarter from three months
earlier, the weakest growth in four years, as exports lost steam amid sluggish
domestic demand. Exports, which account for about 60 percent of the country's
economy, have already showed signs of slowing as a global slump hits emerging
markets.
The BOK predicted that Asia's fourth-largest economy will grow a mere 2 percent
in 2009, down from an estimated 3.7 percent advance in 2008.
Meanwhile, it will be possible for the BOK to keep 2007-2009 inflation between
2.5 and 3.5 percent as the country's consumer prices would slow to an average 3.4
percent during those periods.
The BOK pledged to ease a credit crunch by "actively" supplying liquidity to the
financial system in a timely manner.
"The central bank will induce funds into smoothly flowing to the
liquidity-squeezed sector and plans to support local banks' efforts to boost the
falling capital adequacy ratio," the BOK said, adding that the central bank will
seek more ways to ease a credit crunch in the case of emergency.
Since the mid-September collapse of Lehman Brothers Holdings Inc., the BOK has
pumped 19.5 trillion won (US$14.5 billion) in local currency liquidity into the
financial system.
The BOK is considering shouldering half of a proposed 20 trillion won fund aimed
at helping lenders increase their capital base. The government is seeking to
launch the fund in January to be used to buy preferred stocks, subordinated bonds
and hybrid debt sold by lenders.
The central bank also added that it will strengthen policy cooperation with the
government and the financial watchdog by expanding information sharing and
seeking ways to harmonize fiscal, monetary and financial supervisory policies.
sooyeon@yna.co.kr
(END)
its 2009 monetary policy on bolstering the fast slowing economy and stabilizing
financial markets as inflationary pressure is expected to ease.
The Korean economy is feared to lose momentum sharply this year as the deepening
global economic downturn is widely expected to further hit exports, or the
mainstay of its growth. Most analysts predict economic growth will fall to the
1-percent range.
"The Bank of Korea (BOK) will conduct its rate policy by focusing on reviving the
cooling economy and improving fund flows as inflation is expected to show a
downward trend," the central bank said in a statement.
Since early October, the BOK has cut its key interest rate by a combined 2.25
percentage points to an all-time low of 3 percent in a bid to prop up the cooling
economy, hit by the U.S.-sparked global financial crisis.
The statement echoed BOK Gov. Lee Seong-tae's New Year's message. Lee pledged to
focus on boosting the slowing economy this year, hinting that the central bank
may carry out more interest rate cuts in 2009 to keep Asia's fourth-largest
economy from going into freefall.
The South Korean economy grew 0.5 percent in the third quarter from three months
earlier, the weakest growth in four years, as exports lost steam amid sluggish
domestic demand. Exports, which account for about 60 percent of the country's
economy, have already showed signs of slowing as a global slump hits emerging
markets.
The BOK predicted that Asia's fourth-largest economy will grow a mere 2 percent
in 2009, down from an estimated 3.7 percent advance in 2008.
Meanwhile, it will be possible for the BOK to keep 2007-2009 inflation between
2.5 and 3.5 percent as the country's consumer prices would slow to an average 3.4
percent during those periods.
The BOK pledged to ease a credit crunch by "actively" supplying liquidity to the
financial system in a timely manner.
"The central bank will induce funds into smoothly flowing to the
liquidity-squeezed sector and plans to support local banks' efforts to boost the
falling capital adequacy ratio," the BOK said, adding that the central bank will
seek more ways to ease a credit crunch in the case of emergency.
Since the mid-September collapse of Lehman Brothers Holdings Inc., the BOK has
pumped 19.5 trillion won (US$14.5 billion) in local currency liquidity into the
financial system.
The BOK is considering shouldering half of a proposed 20 trillion won fund aimed
at helping lenders increase their capital base. The government is seeking to
launch the fund in January to be used to buy preferred stocks, subordinated bonds
and hybrid debt sold by lenders.
The central bank also added that it will strengthen policy cooperation with the
government and the financial watchdog by expanding information sharing and
seeking ways to harmonize fiscal, monetary and financial supervisory policies.
sooyeon@yna.co.kr
(END)
