Most members of the Bank of Korea's (BOK) monetary policy board voiced concerns about risks from a rally in the nation's stock and housing markets, citing financial imbalances caused by a flood of liquidity and cheap loans, minutes from their latest meeting showed Tuesday.

In the last rate-setting meeting on Jan. 15, the seven-member board unanimously voted to keep the policy rate at a record low of 0.5 percent to support an economic recovery from the coronavirus pandemic.

Holding fire on the key rate, BOK Gov. Lee Ju-yeol warned that he was closely watching borrowing in stock and property markets but gave few clues on when the BOK would change its monetary policy.

According to the minutes, board members said the BOK must "pay attention" to financial imbalances when it makes a decision on monetary policy.

"Instability of the economy rose due to rising debts and imbalances between the real economy and asset markets," a board member said in the January meeting.

Although financial market have shown signs of stabilization so far, the BOK must cope with potential risks, board members said.

Another board member said a recent stock rally might have been based on "excessive optimism" over an economic recovery and an easing of monetary policy.

A third member said risks of financial imbalances are growing because a recent boom in stock and property markets came from a rise in a "significant amount of debts."

Buoyed by ample liquidity and cheap loans to fight the pandemic, South Korea's benchmark stock index jumped about 30 percent last year.

South Korea's economy shrank 1 percent on year in 2020, marking the worst performance in over two decades, but it appears to have gotten back on a growth track on the back of a mild recovery in exports.

The figure marks the worst on-year growth since 1998, when the nation's economy contracted 5.1 percent in the aftermath of the Asian financial crisis.

However, it is slightly better than the BOK's projection of a 1.1 percent contraction for last year.

In the fourth quarter of last year, the nation's economy grew 1.1 percent, marking an expansion for the second straight quarter. (Yonhap)