Lee Ju-yeol "Considering US Rate Cut, Future Monetary Policy Operation" (Update)

[Image source=Yonhap News]

[Asia Economy Reporter Eunbyeol Kim] Lee Ju-yeol, Governor of the Bank of Korea, stated on the 4th regarding the US emergency interest rate cut, "It is necessary to operate monetary policy in the future by appropriately considering changes in policy conditions."

On the 3rd (local time), the US Federal Reserve (Fed) held an emergency Federal Open Market Committee (FOMC) meeting and abruptly cut the benchmark interest rate by 50 basis points (1bp=0.01 percentage points).

Governor Lee explained, "With this action by the US Fed, the US policy interest rate (1.00?1.25%) has been lowered to a level similar to the domestic benchmark interest rate (1.25%)," and said that such changes in conditions will be taken into account.

He also cited as factors of changing policy conditions ▲ the rapid global spread of the novel coronavirus infection (COVID-19) since late last week, which has increased concerns about the global economic situation, and ▲ the decision by the Group of Seven (G7) governors and finance ministers to strengthen policy coordination.

However, he maintained the position that there are limits to resolving the ripple effects of COVID-19 solely through interest rate cuts. Governor Lee added, "In this process, coordination with government policies must be considered."

The Bank of Korea froze interest rates at the Monetary Policy Committee meeting on the 27th of last month. At that time, the Bank of Korea stated that the contraction in consumption and production activities due to the spread of COVID-19 is caused by health and safety risks, so it is more effective to prioritize selective micro-level policy measures rather than interest rate cuts.

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