Seoul sets money growth

Seoul sets money growth

SEOUL (AFP): South Korea will keep a tight lid on money supply in 1995, with an annual growth target of 12-to-16 percent, the central Bank of Korea (BOK) announced yesterday.

"The BOK will place top priority on stabilizing prices, so it will try to maintain the level of money supply as low as possible," said Kim Won-tai, head of the bank's monetary policy department.

The Seoul bourse, which had been riding a two-day climb, tumbled after the announcement, losing 9.52 points to close at 998.32.

In 1994 the money supply growth band had been set at 14-to-17 percent.

The policy announcement came after South Korea saw an estimated 8.3 percent GNP growth rate in 1994, with predictions the strong economic trend would continue through this year, bringing concerns of overheating and steep price rises, the bank said.

The tight monetary controls will be followed by interest rate rises to further cool the economy by reducing corporate capital investment and burgeoning consumer spending, it said.