ROK central bank says monetary policy to remain accommodative

SEOUL, Dec 31 (Reuters): South Korea's central bank chief on Sunday said monetary policy should remain accommodative in 2018 because inflationary pressure is weak even as the economy is expected to post solid growth in the coming year.

"Inflationary pressure from the demand side isn't forecast to be big and so monetary policies should remain accommodative for the time being," Bank of Korea Governor Lee Ju-yeol said in his New Year's speech, according to a bank statement.

Any further interest rate adjustment will come only after carefully considering the stability of financial markets, inflation and growth path, Lee added.

The Bank of Korea raised interest rates in November for the first time in more than six years to 1.50 per cent, yet tempered market expectations for further hikes by raising concerns about the job market and other uncertainties.

The comments come as the nation's headline inflation came in at 1.5 per cent in December, below the bank's target of 2.0 per cent, raising doubts about the bank's next steps.

Market participants have been expecting the bank to tighten policies gradually in the coming year as weak inflation and uneven recovery in industrial production are risks to growth.