South Korea’s central bank chief publicly urged the Finance Ministry to use more aggressive expansionary fiscal policy next year to sustain growth, saying the era of monetary policy has nearly ended.

His comments could lead to the Bank of Korea and the Finance Ministry each pushing the other to take on the burden of propping up the flagging Korean economy.

“It is rather difficult to say next year’s fiscal policy is accommodative. Fiscal spending is expected to grow only 0.5 percent next year, which is much lower than the expected nominal GDP growth of 4 percent range,” Lee said at a dinner with the press Wednesday.

“Many foreign credit rating agencies say now is the time for fiscal policy to do more. I agree with them.”

The credit rating agency Moody’s said in an earlier report that Korean government finances are “very strong,” citing consistent budget surpluses, relatively low national debt ratio to gross domestic product, at 38 percent, and low external debt.

Lee added that the global era of central banks easing borrowing costs -- to seek economic recovery in the wake of the global 2008 financial crisis -- has ended.

Lee’s stance is quite different from that of Finance Minister Yoo Il-ho, who stressed a mix of fiscal and monetary policies in a meeting with Lee just five days ago.

Some critics said Korea’s high level of household debt, which exceeds 1,300 trillion won, stemmed from the BOK’s series of monetary easing since August 2014, the same month that the Financial Services Commission loosened up rules on debt-to-income and loan-to-value ratios for more mortgage loans.

“With the Sewol ferry accident in April that year, we predicted that the economic downturn would be prolonged for a long time. If the rate cut had been delayed, the weak growth momentum would have worsened further, negatively affecting the economy,” Lee said.

As for the economic outlook in 2017, the BOK could revise down the previously suggested GDP growth forecast of 2.8 percent at the upcoming monetary policy review meeting on Jan. 13, said Lee to lawmakers at the parliament’s strategy and finance committee’s inquiry on the BOK.

Lee also raised concerns about the possibility of the US Federal Reserve raising rates at a faster pace next year.

Expectations for a US rate hike drove up the annual mortgage rates of the top five local lenders to an average of 3.28 percent in November, up 0.28 percentage point from a month earlier, data from the Korea Federation of Banks showed.

By Kim Yoon-mi (yoonmi@heraldcorp.com)