S.Korea c.bank: to watch asset prices, fund flows

Thomson Reuters

S.Korea c.bank: to watch asset prices, fund flows

10.14.09, 10:18 PM EDT

SEOUL, Oct 15 (Reuters) - South Korea's central bank said on Thursday it would work to prevent the current expansionary policy from undermining economic and financial stability while monitoring asset prices and fund flows.

It also said mortgage loan growth, the biggest concern for the central bank since the middle of this year, paused in September due to government lending controls adopted in recent weeks and increased market interest rates.

The remarks, contained in the Bank of Korea's report to parliament, were in line with its policy statement issued last Friday after it held interest rates steady at a record-low 2.0 percent for an eighth consecutive month.

The central bank said Asia's fourth-largest economy was pulling out of the slump faster than initially thought but faced uncertainty due to a possible delay in advanced economies' recovery.

Regarding foreign exchange policy, it affirmed the country's official stance that authorities would let the market decide the won's value but would take action when the exchange rate moved excessively.

(Reporting by Yoo Choonsik; Editing by Jonathan Hopfner)