South Korea's central bank chief on Thursday gave a strong signal for a possible rate hike later this month aimed at reducing the adverse effects from years of low borrowing costs.
"Recently, the South Korean economy has pulled off modest growth on the back of exports, but it is now experiencing an imbalance in many sectors as we have put less significance on investment in the future," Bank of Korea (BOK) Gov. Lee Ju-yeol said in a breakfast meeting with business leaders in Seoul.
"It is necessary for us to create an investment-friendly environment and boost business sentiment," he said. "Also, it is the right time (for the central bank) to make efforts to strike a balance in the financial sector."
Lee has emphasized the BOK's role in redressing an imbalance in the financial field brought on by nearly a decade of low interest rates that have inflated real estate prices and household debt.
South Korea's household credit reached a record high of nearly 1,500 trillion won ($1.33 trillion) as of the end of June.
The comment is considered a strong hint that the central bank may raise the policy rate at its upcoming meeting to be held on Oct. 18.
The BOK has held the key rate at 1.5 percent since November last year, when it made the adjustment for the first time in more than six years. (Yonhap)