Lee Ju-yeol, Governor of the Bank of Korea, says "There is room to respond with interest rates... Not a situation to use other measures"

"US-China Trade War Expected to Ease Slightly This Year"

[Asia Economy Reporter Eunbyeol Kim] Lee Ju-yeol, Governor of the Bank of Korea, stated on the 2nd, "We will maintain an accommodative monetary policy stance" and added, "I believe there is still room to respond with interest rate adjustments."

At a New Year's tea meeting held at the Bank of Korea in Jung-gu, Seoul, Governor Lee said, "It is not an urgent situation where the Bank of Korea needs to use other measures besides interest rate policy immediately; this is more about preparing in advance," and added, "We are putting all possible cards on the table to see what can be used according to the situation." The Bank of Korea recently announced in its '2020 Monetary and Credit Policy Operation Direction' that it will strengthen research on the utilization of monetary policy tools other than interest rates.

Governor Lee said, "In other countries that have introduced zero (0) or negative interest rates, they cannot rely solely on interest rate policy, so they are intensifying research on non-interest rate tools," and added, "Our main tool is still the interest rate, and we will observe how other countries proceed."

Although the Bank of Korea's base rate recently dropped to 1.25% per annum, sparking heated debates about the effective lower bound of the base rate and unconventional monetary policy tools such as quantitative easing, Governor Lee believes there is still room to respond.

He forecasted that the US-China trade war, which had a significant impact on the Korean economy last year, will ease this year. Governor Lee said, "The economic outlook is based on the assumption that the US-China trade war will ease." However, he did not expect a dramatic easing of the trade war. He pointed out that the biggest negative factor for the Korean economy last year was external factors, specifically the trade war and the sharp decline in semiconductor prices. Furthermore, he stated, "Although indicators are expected to improve compared to last year, since the Korean economy has already grown in size and follows global trends, it will take time for a sharp rebound." He added, "This year, I hope the economy will perform well with a balance achieved among the Bank of Korea's goals: economic growth, price stability, and financial stability."

Meanwhile, regarding whether 2% growth was achieved last year, Governor Lee was cautious, saying, "We need to assess the real economic movements in December to make a judgment." He also added that he considers this year's economic growth rate more important than last year's.

This content was produced with the assistance of AI translation services.