Lee Ju-yeol "Normalization of Monetary Policy Within the Year... Not Tightening Even If Raised Once or Twice"

The Bank of Korea Holds Price Stability Target Operation Briefing on the 24th

[Asia Economy Reporters Eunbyeol Kim and Sehee Jang] Lee Ju-yeol, Governor of the Bank of Korea, fixed the timing of the base interest rate hike within this year on the 24th. The governor had previously stated that if a solid recovery trend continues, the accommodative monetary policy should be normalized at an appropriate time in the future.

At the inflation target operation briefing on the 24th, Governor Lee said, "It is necessary to orderly normalize monetary policy at a not-late timing within this year." By specifying the appropriate timing as "within this year," the possibility of a base interest rate hike this year is virtually almost certain.

During the COVID-19 response process, the prolonged low interest rate stance caused household debt to surge and asset prices to soar, resulting in side effects. In fact, the Bank of Korea's Monetary Policy Committee has kept the base interest rate unchanged for the eighth time (12 months) since lowering it by 0.25 percentage points in May last year.

Last month, the Bank of Korea's Monetary Policy Committee unanimously decided to keep the base interest rate unchanged, but during the meeting, many members expressed opinions that it is necessary to gradually normalize the currently unusually accommodative monetary policy and low base interest rate.

On that day, he also said, "There is a need to adjust interest rates in line with the accelerated economic recovery," and "Financial imbalances have accumulated, increasing the need for monetary policy adjustment day by day."

Governor Lee said, "Even if the base interest rate is raised once or twice in the current situation, monetary policy remains accommodative."

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