Park mulls quantitative easing program to revive economy

President Park Geun-hye said Tuesday that she will positively consider a Korean version of quantitative easing, reviving expectations for drastic new measures to revive the economy.

"My stance is that the idea deserves positive consideration,” Park said during a meeting with managing editors from the nation’s major news organizations at Cheong Wa Dae. “I will try to push for it, if deemed required.”

The comments came as the Asia’s fourth-largest economy is estimated to have grown 0.4 percent on-quarter in the first quarter of this year, the weakest in three quarters, with experts betting heavy on the economy missing the government’s full-year growth target of 3.1 percent.

During its election campaign earlier, Park’s ruling Saenuri Party had pledged a quantitative easing program that envisioned the Bank of Korea buying bonds issued by policy lender Korea Development Bank to support corporate restructuring, as well as mortgage-backed securities. 

The idea, which requires revision of related laws, suffered a setback as the party lost its parliamentary majority in the elections.

Park’s backing of the quantitative easing program is certain to spark another round of debate in Korea, where the central bank is holding its base interest rate unchanged at a record low of 1.5 percent for the 10th consecutive month.

Opposition parties have countered that the past implementation of such a move by the Bank of Japan and the European Central Bank showed it was unsuccessful.

By Park Han-na (hnpark@heraldcorp.com)