SEOUL, May 20 (Yonhap) -- The National Assembly Research Service on Monday criticized the Bank of Korea (BOK)'s surprise slash of the key interest rate in May as having undermined consistency of policy and independence of the central bank.
"It was as if a car turned right while the blinker was signaling a left turn," said a report from the service that conducts research and analysis upon legislators' requests.
After six consecutive months of freeze, the BOK on May 9 cut the benchmark rate by a quarter percentage point to a two-year low of 2.5 percent. Market watchers had bet on another freeze in May, especially after the BOK Governor Kim Choong-soo defied government pressure for a cut the previous month.
Won Jong-yeon, the author of the report, said the factors Kim cited for the decision, mainly maximizing the impact of extra government budget and rate cuts by other countries, were present in April as well and therefore do not explain the change of position.
The report argued that by going against market expectations, the BOK has lost trust regarding its policy consistency and independence.
"It's doubtful whether the BOK can instill confidence that it will maintain independence when there is need for another economic stimulus," the report said.
