Minutes reveal the majority of BOK board members are in favor of leaving the option for further tightening open

The minutes of the Feb. 23 meeting of the Bank of Korea’s board showed that the majority of its members voted to keep the interest rates steady. However, they also agreed that it was too soon to declare an end to their tightening campaign.

Out of the five members who voted for the unchanged policy rate, four suggested leaving the door open for further rate increases if necessary to contain inflation, while the fifth member saw no need for further tightening.

One unnamed member stated that they should keep the possibility of future rate increases open, depending on the development of economic conditions in both the domestic and global markets.

Governor Rhee Chang-young had already revealed that Cho Yoon-je, the sixth member, had dissented and voted for a 25 basis point increase in the policy rate.

The minutes contained comments from six of the seven board members since Governor Rhee does not vote when there is a majority without him.

Since August 2021, the Bank of Korea has raised the policy rate by 300 basis points from its record-low of 0.50% to contain inflation. However, investors are betting that the tightening is over as the economy, Asia’s fourth-largest, is on the brink of falling into a recession, and inflation pressure is easing.

The details of the policy meeting were released as investors were reducing their bets on further tightening of global interest rates due to fears of a U.S. banking sector crisis impacting financial markets.