"(The bank) should start to adjust the degree of monetary policy easing at an appropriate time, taking into account the pace of the economic recovery, jobs, inflation trend, as well as financial market situation for the next few months," said a policymaker of the board, one of at least four members who flagged the need for policy tightening.
Others said the bank needs to consider a withdrawal from its loose monetary policy to some extent as inflationary expectations grow.
Minutes of the last meeting showed the board members were split over the pace of policy tightening, as some were worried about building up of dangerous imbalances and asset price rallies more than others.
In May, the BOK upgraded its growth outlook to 4.0% from the 3.0% projected in February after keeping its base rate unchanged at an historic low of 0.50%, as widely expected.
The gradual withdrawal of the loose monetary policy became more likely in the past week as Governor Lee Ju-yeol said on June 11 raising interest rates would be inevitable as the recovery strengthens. With consumer inflation at a nine-year high, strong price pressure also raises the possibility that the bank may have to tighten policy sooner than expected. Most analysts in May saw the BOK raising rates at least once in 2022, but many including Societe Generale now see the rate hike cycle starting in the fourth quarter of this year.
(Reporting by Cynthia Kim; Editing by Simon Cameron-Moore; Editing by Muralikumar Anantharaman)
By Cynthia Kim
