Lee Ju-yeol "Base Interest Rate Should Align with Domestic Factors, Not External... Won't Be Swayed by the US"

Ijuyeol, Governor of the Bank of Korea [Image source=Yonhap News]

[Sejong=Asia Economy Reporter Son Seon-hee] Lee Ju-yeol, Governor of the Bank of Korea, said on the 16th, "(Monetary policy) should be aligned more with domestic factors than external factors."

At a press briefing related to the 'Price Stability Target Operation Status Report' on the same day, when asked about "the impact of future U.S. Federal Reserve (Fed) monetary policy decisions on domestic monetary policy," he replied, "Because we acted in advance when we could move, there is no risk of being passively dragged along by the Fed's (normalization) pace." He added, "the Bank of Korea's proactive actions have significantly helped secure various flexibilities in policy operations."

Regarding the impact of the Fed's monetary policy normalization on the domestic financial market, he said, "If the pace of the Fed's monetary policy announced today proceeds as expected and does not deviate from market expectations, I believe there will be no sudden fluctuations in the domestic financial market."

Additionally, Governor Lee reaffirmed that there has been no change in the monetary policy stance since the Monetary Policy Committee meeting on the 25th of last month. He expressed a cautious stance, saying, "If there is a change to watch carefully about three weeks after the Monetary Policy Committee meeting, it would be the spread of COVID-19, but it is still difficult to say what the impact will be." He continued, "Although the Fed's monetary policy normalization will have some impact, considering the overall domestic economic situation, the original stance of continuing interest rate normalization remains unchanged."

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