Policymakers call for time to gauge impact of previous rate hikes

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Policymakers call for time to gauge impact of previous rate hikes

Most central bank policymakers underlined the need to take time to gauge the impact of previous rate hikes when they decided to leave the policy interest rate unchanged last month, minutes of their meeting showed Tuesday.

The seven-member monetary policy board of the Bank of Korea (BOK) held a rate-setting meeting on Feb. 23 and voted to freeze its key interest rate at 3.5 percent.
This marked the first time that the BOK stood pat following seven straight increases delivered since April last year to fight inflation. The decision was not unanimous, with one board member voting for a quarter-point rate increase.
"Given the economic conditions at home and abroad, it is appropriate to keep the key interest rate unchanged [...] and to monitor the impact of the tightening on the real economy and inflation," an unidentified member was quoted as saying by the minutes.
"It seems appropriate to watch future developments in inflation and growth, as well as financial market conditions, before deciding whether to tighten further," the member noted.
Another member echoed the view, saying the interest rate has reached a restrictive level and the impact of previous increases has been "clearly visible" in financial markets.
"For the first time since the global financial crisis, the key interest rate has risen to a tightening level ... Given the time lag in monetary policy, we believe it is time to assess the effects of policy spillovers and consider further hikes based on developments of inflation and external and domestic uncertainties," the member said.

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