SEOUL, Jan. 14 (Xinhua) -- Bank of Korea (BOK) Governor Kim Choong-soo said Monday that monetary policy can be effective when it comes with fiscal policy, indicating that the central bank may cut its policy rate further in accordance with the expected fiscal stimulus.
"No policy can be effective on its own. It can create effect when the policies come together, so it is called policy mix. Fiscal and monetary policies can go separately, but they would be effective when they come together," Kim told foreign correspondents in central Seoul.
Kim, however, noted that the BOK as a central bank has its own mandate of inflation targeting, hinting that the additional rate cut would be made in case of no inflationary pressures.
Some interpreted his remarks that all possibilities are open in terms of the monetary policy as the instant rate cut, but Kim cautioned that it should not be done necessarily so, reiterating that the policy decision will be made with information available at the time.
His comments came after the Bok kept its benchmark interest rate on hold at 2.75 percent, keeping its wait-and-see stance for three straight months. The bank lowered the base rate by 25 basis points in July and October 2012 each.