South Korea's central bank chief said on Monday that monetary policy needs to stay accommodative to support the economy, but adjustments should be reviewed if growth remains strong.

 

In a speech prepared for the Bank of Korea's 67th anniversary, Governor Lee Ju-yeol said uncertainties remain high and inflationary pressure isn't strong, which merits the bank to maintain its current record-low interest rate of 1.25 percent for the time being.

 

"For now, the accommodative stance in monetary policy needs to be maintained. Having said that, if economic recovery continues and shows clear signs of improvement, we may need to adjust the pace of monetary policy easing so we will need to thoroughly review such cases, Lee said.

 

The pace of economic growth is accelerating, Lee said, with sharp improvement in exports and investment.

 

Soaring household debt and sluggish household income growth are risks ahead, which could damp private consumption, he added.

 

South Korea's economy grew 1.1 percent in January to March on a seasonally adjusted basis, its strongest in six quarters.

 

Most analysts believe the central bank will keep borrowing costs unchanged for the rest of this year, before it considers starting to normalise rates next year.

 

Photo: REUTERS/Kim Hong-Ji