Thursday, October 29, 2009
SEOUL, Oct 28 - A member of the central bank's monetary policy board has called for a fast increase in interest rates to avert an economic bubble, a local newspaper reported.
'Current rates are very low; they should be normalised fast,' the Maeil Business Newspaper quoted Bank of Korea board member Choi Do-soung as saying at a local seminar.
Choi said fears of a possible double-dip for the economy had put the breaks on a rate increase, but the country should endure the pain of higher interest rates to help accelerate corporate restructuring and improve the health of the economy.
'If rates remain low for too long, it will naturally create a bubble in the economy. It is the central bank's position that interest rates should return to normal levels,' he was quoted as saying.
The Bank of Korea kept the base rate at a record low of 2 percent for an eighth consecutive month in early October, amid rapid economic recovery and regulatory measures to avert a property market boom. It reduced the benchmark rate by 3.25 percentage points during the height of the global financial crisis.
The central bank is next due to review the benchmark rate on Nov. 11.
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