South Korea central bank member highlights need to prepare for interest rate hike

SEOUL: South Korea's central bank should prepare in advance for an increase in interest rates, minutes from the Bank of Korea's latest policy meeting showed one member of the bank's board saying.

"When considering the current situation of household debt, if the central bank raises rates then it will have a considerable influence in stemming borrowing across the board," said one monetary policy committee member in the minutes from the April 10 meeting.

"The central bank must prepare to normalise rates at a timely period when recovery becomes apparent."

The minutes are traditionally kept anonymous, unless a board member specifically requests their name be identified.

The Bank of Korea kept interest rates steady for an eleventh straight month in April though its new chief sent clear signals supporting the market's consensus view of an interest rate hike later this year.

The minutes also showed that the central bank forecasts exports will keep accelerating in the coming months as the global economy improves.

The central bank raised this year's economic growth forecast to 4 percent from the previous 3.8 percent, while cutting the inflation projection to 2.1 percent from 2.3 percent, although the changes were mainly due to recently implemented calculation changes.