The Bank of Korea will not test how the Korean economy performs and responds to its monetary policy, Governor Kim Choong-soo said in a meeting with economic researchers and professors on Wednesday.

Kim’s remarks came in defense of the central bank’s decision to freeze its key base rate at 2.75 percent this month for the fifth straight month, reiterating that the global economy, albeit slowly, is heading for recovery.

There has been consensus in the market that the central bank may move to lower its rate to stimulate the economy where various macroeconomic data show weakness such as in industrial production and employment.

Kim pointed out that the global economy, especially the U.S., was heading toward winding down their monetary easing policies by bringing an end to bond purchases and normalizing key rates.

However, he expressed concerns over the ongoing trend of global central banks apparently competing against each other through unorthodox monetary policies, with Japan recently joining this move to depreciate its currency to boost exports.

Some market analysts forecast that the central bank might continue to keep its key rate unchanged throughout the year, or pointed to the possibility of raising it in response to increased government spending and rising inflation.

By Park Hyong-ki (hkp@heraldcorp.com)