Cho Dong-chul, one of the seven members of the Bank of Korea’s key rate-setting committee, said Wednesday that Korea should still seek a monetary policy to sustain the nation’s weak growth.

His comment is in contrast with the view of BOK Gov. Lee Ju-yeol, who has repeatedly emphasized that the era of monetary policy has nearly ended and the government should use more aggressive expansionary fiscal policy to support growth.

“If monetary policy has a role that supports our economic growth, it should aggressively play its role,” Cho said at a press conference in Seoul.

“I don’t agree with some views that monetary policy has lost its effectiveness. I believe monetary policy still has a formidable power on the real economy in the short term.”

In the latest rate-setting meeting in February, the BOK left its key rate at a record low of 1.25 percent, the eighth consecutive rate freeze since it lowered the rate by 0.25 percentage point in June last year.

Since the US Federal Reserve raised its benchmark short-term interest rate in mid-March by 0.25 percentage point to a range of 0.75 percent to 1 percent on strong US jobs and rising inflation, local experts said the BOK has little room to move its base rate in any direction this year, due to mounting household debt and the already all-time-low interest rate.

Cho said despite the great impact from the US central bank’s rate decisions, the BOK should decide its inflation-targeting decisions independently, based on the Korean economic situations.

“Inflation targeting means, rather than focusing on the US rate hike itself, we should analyze how its cause, such as economic expansion and inflation growth, is affecting Korea’s exports and foreign exchange, and finally on Korea’s inflation,” he said.

While the BOK sets its inflation targets at 2 percent, the nation’s annual consumer prices index has remained below 2 percent since 2013, after it marked 2.2 percent in 2012.

By Kim Yoon-mi (yoonmi@heraldcorp.com)