Optimistic Views of Low Inflation Seen Premature: BOK Governor Chon

Article excerpt

Bank of Korea governor Chon Chul-hwan yesterday dismissed the optimistic view that like the U.S., the nation's economy could enjoy sustainable growth, coupled with low inflation.

In a speech delivered at a CEO seminar held by the Korean Standard Association in Cheju, governor Chon said, ``The economy last year could gain the benefit of non-accelerating inflation because the import price was dragged down, backed by the won recovering some of its lost value in the wake of the financial crisis, along with higher economic growth.''

Yesterday's remarks came amid growing concerns by market participants over a build-up of inflationary pressure. They have been expressing worries that these inflationary woes will be realized in the second half of the year, which would mean that the BOK cannot help but increase its benchmark short term interest rate in the near future.

However, governor Chon hinted that the BOK will keep the interest rate unchanged for the time being, stating that the BOK would implement the monetary policy with the overall state of the economy and financial market considered. …