SEOUL, Feb 4 (Reuters) - South Korea’s Monetary Policy Board was divided over members’ views regarding the nation’s property market, the minutes of a January meeting showed on Tuesday.
In January, the Bank of Korea kept its benchmark rate steady at 1.25% and struck an upbeat tone, citing signs of an improving trade environment and a resilient domestic backdrop. The bank already cut rates twice last year.
But minutes of the last meeting showed that two dissenters who voted to cut the base rate by 25 basis points to 1%, which would be the lowest on record, had said the property heat-up was limited only to Seoul, the capital.
Monetary policy was not an appropriate tool to tackle the issue, they added.
“(South Korea’s current property heat-up) is different from the general home price change triggered by excessive liquidity, but is a unique phenomenon in Seoul,” said one board member, who was not identified.
The member added that the phenomenon could be interpreted as a price change mainly caused by supply and demand in particular assets, adding that home prices in non-metropolitan area had been falling over the past two years.
“It would be more appropriate to tackle this issue with housing or regional policies, rather than monetary policy,” the board member added.
The minutes do not identify the speakers.
The majority of board members, however, still saw the need for the bank to be cautious on such issues as high household debt and risks over financial imbalances. (Reporting by Joori Roh and Cynthia Kim; Editing by Clarence Fernandez)