Bank of Korea admits to monetary policy problems

Lee Seong-tae, governor of Bank of Korea, said the central bank has problems in carrying out monetary policy effectively because of cross-border capital transactions that lead to increases in the money supply in spite of rises in key interest rates.

The central bank has raised its policy rate seven times since October 2005, with the interbank overnight key rate now hovering around 5%, which is the highest level it has been for six years.

In spite of this, Lee said, "The scale of increase in our