Park Jong-seok, Deputy Governor of BOK, "Raised Interest Rates Twice but Still Accommodative"

Deputy Governor Park's Press Conference
"Omicron Increases Inflationary Pressure"

[Asia Economy Reporter Jang Sehee] Park Jong-seok, Deputy Governor of the Bank of Korea, said on the 9th, "Although the base interest rate has been raised twice, it is still accommodative."

At a press conference on the Monetary and Credit Policy Report (December 2021) held that day, Deputy Governor Park stated, "Although there are uncertainties such as the Omicron variant, under the current outlook, the economy is expected to maintain a favorable growth trend, and inflationary pressures are higher than expected and likely to persist for a long time."

He added, "Considering the real economy conditions, the degree of monetary policy accommodation can actually become accommodative when the real economy improves," and said, "Taking these factors into account, it can still be considered accommodative."

However, Deputy Governor Park stated that it is not yet a situation to raise interest rates to a tightening level.

He said, "We are still in the stage of recovering from COVID-19," and added, "Although the growth trend is favorable, since uncertainty factors are emerging, raising interest rates to a tightening level is not a stage that can be considered at the current time."

He continued, "The Governor said that if market expectations differ from the Bank of Korea's judgment, we will actively communicate, but the market expectations and the Bank of Korea's judgment are not different," and said, "If market expectations need to be adjusted because they differ from intentions in the future, there are inflation meetings, New Year's addresses, and even outside of scheduled communication opportunities, we will actively communicate." In the financial market, it was expected that the Monetary Policy Committee of the Bank of Korea would raise the base interest rate three times by the end of next year to 1.75%, but recently, due to factors such as the Omicron variant, expectations have been revised downward to 1.5%.

Regarding the future impact of Omicron, he said, "The number of COVID-19 confirmed cases is increasing, and it is uncertain what characteristics the new Omicron variant has and how it will affect," and added, "Since Omicron is also a factor that increases inflationary pressures and uncertainties have grown, we will closely monitor new risk factors, analyze them thoroughly, and make judgments."

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