S.Korea BOK grew warier on economy in Oct

SEOUL, Nov 24 - South Korea's central bank was relieved by stabilising housing prices but grew more concerned about the uncertain global economic prospects at its October policy meeting, minutes released on Tuesday showed.

But the minutes gave no clue to why Bank of Korea Governor Lee Seong-tae, soon after returning from a G20 summit meeting in Pittsburgh, reversed his previously hawkish stance at the Oct. 9 policy meeting.

The document showed six of the Bank of Korea's board members voted to hold the benchmark rate <KROCRT=ECI> steady at a record-low 2.0 percent in October because of lingering uncertainty surrounding the global economy. As chairman, the governor only casts his vote when the other six members are equally divided.

"Along with the disappointing pace of recovery in the advanced economies, the increased volatility in raw materials prices and the fast rise in the value of the won could dampen the economy's recovery," one member said.

"Growth in both mortgage lending and housing prices is moderating...while share prices are showing signs of correcting," the member said at the meeting.

The Bank of Korea does not name any of the board members in its meeting minutes.

Lee's strong warnings in September of the growing risk from rising asset prices had prompted investors to predict an imminent rise in interest rates, expectations which largely evaporated after his surprising change in stance in October.

Minutes from the September policy meeting, released late last month, also provided no clue to why Lee indicated an imminent increase in interest rates, which had been kept at a record low since a February cut.

The central bank held the 7-day repurchase agreement rate steady again at its Nov. 12 meeting and is due to release meeting minutes for the last meeting in late December.

Lee's dovish comments at news conferences in October and November have now led investors and analysts to scale back their bets on an interest rate increase during early 2010.

South Korea's economy, Asia's fourth-largest, expanded by a faster-than-expected 2.9 percent in the third quarter from the previous three months after seasonal adjustments, the strongest in 7-½ years.

But policymakers and analysts remain cautious because advanced economies are still struggling to fully emerge from the slump at a time when the effect of stimulus spending is quickly fading around the world. ((choonsik.yoo@thomsonreuters.com; +82 2 3704 5580; Reuters Messaging: choonsik.yoo.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))