Bank of Korea board worries about jobs stats

Korea’s central bank board members voiced concerns about sluggish job growth during last month’s monetary policy meeting, although inflationary pressures were eased, according to minutes from the Bank of Korea (BOK)’s August meeting on Tuesday.

Four of the central bank’s seven members expressed concerns about the job market, with one board member saying that a weaker job market could hurt private consumption.

The monetary policy committee left its base rate steady at 1.5 percent last month, although the decision was not unanimous as Lee Il-houng, part of the seven-member board, voted for a 0.25 percentage point increase. The hawkish member also demanded a rate hike at the July meeting.

Despite the government’s expansionary fiscal policy, Korea’s economy created just 5,000 jobs in July - the slowest growth since January 2010.

“At a time when the cycle of adjustment in private consumption is getting longer, main economic indicators are below expectations,” said a BOK member.

“In the case of the job situation, it has been sluggish since late last year due to structural, policy and economic factors,” the member said.

BOK board members agreed that inflationary pressures have eased, which could give the BOK more leeway before moving to further tighten borrowing costs.

Korea’s consumer price index climbed 1.4 percent last month from a year earlier, decelerating from the previous month’s 1.5 percent on-year gain, according to the data compiled by Statistics Korea.

From a month earlier, the index rose 0.5 percent.

The August figure is well below the BOK’s target of 2 percent for the year, stoking speculation that the central bank’s monetary tightening may be pushed forward at a gradual pace.

Yonhap