South Korea's monetary policy is considered still loose although the Bank of Korea delivered its first pandemic-era rate hike in August, a member of the BOK's rate-setting board said Wednesday.

The remarks by Suh Young-kyung are expected to reinforce market expectations that the central bank may again raise its key rate later this year or early next year.

"In spite of a hike in the key rate in August, the current monetary policy is still loose," Suh told a forum in Seoul.

The BOK must address concerns about a buildup of financial imbalances even though inflation has been kept below its target of 2 percent, Suh said.

In August, the BOK raised the key rate by 0.25 percentage point to tackle rising inflation and rein in surging household debts, ending 15 months of record low interest rates amid signs of improvements.

It marked the first rate increase since May last year, when the BOK cut the key rate to a record low of 0.5 percent.

Earlier this month, the BOK said it will gradually adjust its monetary easing as it seeks to meet its inflation target of 2 percent for this year amid signs of a robust recovery from the COVID-19 pandemic.

However, the BOK said the timing of another rate hike will depend on a resurgence of COVID-19 infections and risks of financial imbalances. (Yonhap)