SEOUL, July 18 (Xinhua) -- The Bank of Korea (BOK) said Friday that the focus of future monetary policy will be on inflation management while it will continue to closely monitor overall economic and financial market conditions.
The anti-inflation commitment by the BOK came out as the South Korea's inflation rate jumped to 5.5 percent in June from the year earlier, the highest gain since November 1998.
"The central bank will be focused on keeping inflation in check in the coming months," the BOK chief Lee Seong-tae said in a meeting with the bank's executives and senior officials to assess the status quo of the economy.
"Economic situations at home and abroad are not likely to improve substantially. The growth of the Korean economy is slowing while consumer inflation will likely remain stubbornly high for a considerable period," he said. The BOK froze its policy rate at 5 percent in July for the 11th consecutive month, reflecting its concerns about high inflation.
"The upward momentum of the Korean economy is weakening, hurt by sluggish consumer and corporate spending although exports remain robust, and consumer inflation is growing at a faster pace," Lee added.
He also said he is concern about the country's money supply increase mainly due to the growth of bank loans, while long-term market interest rates have spiked on inflation fears.
South Korea's money supply grew at a double-digit rate for the 21st straight month in May, according to the data released by the Financial Supervisory Service (FSS). The data showed that bank lending to small and medium enterprises reached 398.9 trillion won, up 28.9 trillion won (28.6 billion U.S. dollars) during the first five months of 2008 while household loans amounted to 371.8 trillion won gaining 10.2 trillion won in the same period.
