One policymaker at South Korea’s central bank told last month’s rate-setting meeting that a rate cut might do little to boost consumption and investment due to a prolonged global economic slowdown, the bank’s September minutes showed Tuesday.

Trumping market players’ bet on a rate cut, Bank of Korea Gov. Kim Choong-soo and his six fellow policymakers left the benchmark 7-day repo rate unchanged in September. In July, the central bank made a surprise rate cut.

“It would be difficult to make a turnaround for the local economy, only with the easing policy, given that the global economy is entering a long-term low growth trend,” the minutes quoted the unnamed policymaker as saying.

“There should be a thorough assessment of whether an additional rate cut could have an impact on boosting consumption and investment.”

He also said that a rate cut would have higher opportunity costs than benefits to growth, stressing the need to draw up microscopic policy actions.

“As the global economic slump is likely to continue for a considerable period of time, the policy room should be reserved in a bid to brace for the protracted slowdown.”

The minutes showed how closely the BOK policymakers watch stimulus measures by major central banks in deciding the rate policy.

“The Federal Reserve’s assessment of the U.S. economy and its policy actions should be closely watched. In addition, we should closely monitor China’s future policy actions as the (slowdown) of the Chinese economy has big impacts on the Korean economy,” another policymaker said.

The BOK policymakers also warned against risks of rising oil and grain prices on consumer inflation and still-high inflation expectations, according to the minutes.

“Over the long term, we should focus on unstable factors from the supply side and high inflation expectations,” one policymaker said. (Yonhap News)

The minutes showed that the board members expect the Korean economy to grow less than the BOK’s current 3 percent growth estimate in 2012.

More analysts are anticipating that the BOK will cut the rate to 2.75 percent in October when it will unveil its revised 2012 growth outlook. The next review is slated for Oct. 11. (Yonhap News)