Lee Ju-yeol: "Discussion and Review of Monetary Policy Adjustments Starting from the Next Monetary Policy Committee Meeting"

On the morning of the 15th, Lee Ju-yeol, Governor of the Bank of Korea, is speaking at a press conference on monetary policy direction held at the Bank of Korea in Jung-gu, Seoul.

[Asia Economy Reporter Kim Eun-byeol] Lee Ju-yeol, Governor of the Bank of Korea, stated on the 15th, "I think it is time to discuss and review whether it is appropriate to adjust the degree of monetary policy easing from the next Monetary Policy Committee meeting."

Governor Lee made these remarks during an online press conference after deciding to maintain the interest rate at around 0.50% at the Monetary Policy Committee meeting that day.

He said, "At the May press conference, I said we would maintain the current easing stance 'for the time being,' and two months have passed since then," adding, "Although COVID-19 is resurging, considering the economic recovery trend, the expansion of inflationary pressures, and the accumulated risks of financial imbalances comprehensively, I think it is time to review this from the next meeting."

He also explained that the omission of the phrase 'for the time being' in this monetary policy direction statement was a measure taken in consideration of this situation. He said, "(Currently) given the situation, there was a discussion that it would be better not to use the phrase 'for the time being,'" and "so the wording was adjusted."

On the same day, while the Bank of Korea kept the base interest rate unchanged, Monetary Policy Committee member Ko Seung-beom expressed a minority opinion that the rate should be raised by 0.25 percentage points. Although the fourth wave of COVID-19 has not yet shown signs of subsiding, considering the household debt scale reaching 1,765 trillion won, it appears that the opinion to raise rates to reduce financial imbalances was reflected. Member Ko is a figure who has served as Director of the International Finance Bureau at the Ministry of Strategy and Finance, Director of Bank Supervision at the Financial Supervisory Service, and Director of Financial Policy at the Financial Services Commission, and has led major measures related to household debt and corporate restructuring at the Financial Services Commission.

Meanwhile, Governor Lee explained the reason for keeping the base rate unchanged as follows: "Although the domestic economy continues to recover due to strong exports, investment, and improved private consumption, COVID-19 has recently spread again, so it is necessary to observe the future economic trends and their impacts a little longer."

However, he predicted that the recent resurgence of COVID-19 would not significantly impact this year’s economic growth forecast.

Governor Lee said, "With strengthened social distancing, private consumption, which had recently shown improvement, will certainly be negatively affected to some extent," but added, "If other quarantine measures and the expansion of vaccination plans are implemented, the spread will subside, and the effect of the government’s supplementary budget will be added, the economic recovery trend will not be greatly damaged." Therefore, he forecasted, "This year’s economic growth rate will be around 4%, as projected in May."

He further stated, "Exports and investment are expected to continue their solid momentum, and the government’s ongoing economic stimulus measures are also expected to contribute to growth to some extent," adding, "Then, the GDP gap (the difference between actual GDP and potential GDP) will likely be eliminated by around the first half of next year."

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