A board member of South Korea's central bank hinted Wednesday at a possible rate increase if the global economic recovery continues and central banks opt for tighter fiscal policies.
Hahm Joon-ho, a member of the monetary policy board at the Bank of Korea, said economic growth and fiscal tightening overseas will affect the country's neutral interest rates.
"An upward pressure on the domestic neutral real interest rate could heighten the necessity to adjust the country's accommodative policy," he said in a meeting with reporters.
Neutral-level interest rates mean that they are neither stimulating nor slowing economic growth.
He also said the BOK will take into account the pace of recovery in domestic consumption and consumer prices in adjusting the pace of the country's present accommodative policy.
The BOK is set to hold its rate review session on Nov. 30 to decide whether to keep or adjust the all-time low rate of 1.25 percent.
In October, the BOK kept its policy rate at the record low level of 1.25 percent, extending its wait-and-see approach for the 16th consecutive month.
The central bank has said it may take a monetary tightening stance if the economy shows signs of robust recovery, a comment widely seen as signaling a rate rise by the central bank over the long haul.
Hahm asked economic players, such as households and companies, to make preemptive efforts to manage any risks that could arise in the case of rate increases. (Yonhap)