By Yoon Ja-young
Staff Reporter
The nation's top central banker said Thursday that he will continue to keep borrowing costs low to support economic recovery, hinting that there will be no drastic rate hikes in the near future.
"The key rate will be managed to help the economy recover for the time being," Bank of Korea Governor Lee Seong-tae said in a new year's speech, Thursday.
He added that due to the uncertainties in the economic growth, the easy-money policy should continue to boost the growth engine in the private sector.
Lee pointed to the delay in the recovery for developed economies and recurring problems in the global financial market as some of the uncertainties for the local economy. "The macroeconomic policy should focus on bolstering the economic recovery," he stressed.
The Financial Supervisory Service Governor Kim Jong-chang also said that there remain risk factors for the economy. "Externally, there is concern that the recovery will be delayed in major developed economies and that there could occur further problems in the financial market. The asset bubble in the newly developing economies and the countries with excessive debt still remain as problems," Kim said in a new year's speech.
Internally, he pointed out that the growing debt of small- and medium-sized businesses or the snowballing household debt could be a burden on the economy.
The central bank governor, meanwhile, also said that the policy should focus on the possibility of economic imbalances following an easy-money policy. "We will moderate the monetary policy by considering external and internal financial and economic conditions," the governor said.
He added that special attention should be paid to the household debt and asset market when considering that the global financial crisis was triggered by the excessive expansion of credit and the bubble in the asset market.
Financial Supervisory Service Governor Kim added that the emergency measures taken during the crisis would be halted step by step. "The support program for small- and medium-sized firms will be scrapped over time, but we will take special heed so that the ones with good potential won't fall into trouble," the governor said.
He added that the corporate restructuring would continue. "We will continue efforts to set a regular restructuring program that works on the market system," he added.
He said the financial regulator would help people with poor credit ratings find ways to borrow money. Illegal private lenders, meanwhile, should be rooted out from the market, he added.