Bank of Korea to bolster economic recovery: chief

By Park Bo-ram
SEOUL, June 12 (Yonhap) -- South Korea's central bank will ramp up efforts to
help sustain improvements in the real economy and the financial markets in the
second half, its chief said Friday.

"The central bank will focus its monetary policy on helping the economy maintain
an upward trend," Bank of Korea (BOK) Gov. Lee Seong-tae said in a message
marking the 59th anniversary of the central bank's founding.
"The South Korean economy is improving, but a full-fledged recovery will not be
easy in the short term as it will take time for exports to rebound," he said.
The BOK on Thursday left its benchmark interest rate unchanged at 2 percent, a
fourth straight rate freeze, to help prop up an economic recovery. The central
bank slashed a total of 3.25 percentage points from October to February.
Despite budding optimism over an economic turnaround, the central bank chief
warned that "potential problems linger that could hamper the path to a fast
recovery."
"A delay in cleaning up bad assets in banks' balance sheets and rising
geopolitical tensions could potentially threaten an economic recovery," he said.
"Greater efforts should also be made to spur a corporate revamp."
Inter-Korean tensions have escalated since April when North Korea launched a
rocket allegedly capable of reaching the U.S. state of Alaska, followed by a May
25 nuclear test and several test-firings of short and medium-range missiles.
Warning against looming signs of inflationary pressure, Lee said the central bank
will put top priority for its monetary policy on attaining price stability in the
July-December period.
"The central bank should keep an eye on the likelihood that growing raw material
prices worldwide may hamper price stability," he said. "Rising oil and other
commodity prices could also derail the economy's recovery."
South Korea's consumer prices rose 2.7 percent from a year ago in May, a figure
within the central bank's target range of 2.5-3.5 percent.
pbr@yna.co.kr
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