BOK to cut rate-setting meetings to eight in 2017

South Korea's central bank said Thursday it will reduce the number of rate-setting meetings to eight per year starting in 2017 as part of efforts to enhance the validity of its monetary policies.

The decision came after Bank of Korea Gov. Lee Ju-yeol noted sometimes fewer were better.

"Central banks of major advanced countries are reducing their number of rate-setting meetings to eight per year and the main reason for this is that it is most desirable when a monetary policy is based on long-term goals and outlooks on future conditions," the top central banker said in a press briefing earlier this month.

"But when such a policy is open to changes every month, the market tends to react too sensitively to monthly indicators, which in turn increases market volatility," Lee said.

Against such a backdrop, the BOK said its monetary policy board will hold eight rate-setting meetings per year from 2017, along with four economic review sessions.

"In case a need for a monetary policy arises due to rapid changes in economic conditions, an emergency (rate-setting) meeting will be held," it said.

For the immediate future, the BOK said it will continue to maintain its soft monetary policy to ensure growth in Asia's fourth-largest economy.

"It will maintain its monetary easing stance in 2016 as the recovery rate of the local economy is expected to be slow while the upward pressure on consumer prices is not expected to be too great," it said.

The plan for 2016 comes after the U.S. Federal Reserve raised its key rate for the first time in nearly a decade, which many believe will eventually force the BOK to increase its own policy rate to prevent a mass outflow of foreign capital.

The bank said it will continue to look out for possible problems stemming from the U.S. rate hike, as well as the country's own prolonged quantitative easing.

"It will also pay attention to financial risks coming from the accumulation of financial imbalances caused by prolonged easing and increased volatility in the financial market stemming from the non-alignment of the monetary policy with that of the U.S. Fed," it said. (Yonhap)