Leaving Ijuyeol, the final message is 'Interest Rate Hike'

Trusted for Consistent Policy
Proactive Interest Rate Hike Deemed 'Appropriate'

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jeong] "While the U.S. Federal Reserve (Fed) was only talking, the Bank of Korea took action."

William Pesek, a Bloomberg columnist, made this assessment in an article he contributed to Forbes in November last year regarding the Bank of Korea's preemptive interest rate hikes. In August last year, the Bank of Korea was the first among major central banks to raise interest rates, and then implemented additional hikes in November of the same year and January of this year, raising the rate to 1.25%.

At the time, there was debate over whether the preemptive rate hike was appropriate while major advanced countries remained inactive, but the consensus in the recent economic community is that it was "appropriate."

Lee Ju-yeol, the longest-serving governor in the Bank of Korea with 43 years of service, will end his term on the 31st. During his 8 years in office, he cut the base interest rate nine times and raised it five times. He took office when the base rate was 2.50%, lowered it to a historic low of 0.50%, and then raised it back up to 1.25% before retiring.

He began his tenure just fifteen days before the Sewol ferry disaster in 2014, facing negative public opinion and criticism over the Bank of Korea's inaccurate economic forecasts. However, by leveraging "transparent information disclosure" and "communication" as his weapons, he implemented consistent monetary policies and gradually regained market trust.

The restoration of authority to the Monetary Policy Committee, which had been criticized as a rubber stamp, was also achieved during Governor Lee's term. Since October 2014, the existence of dissenting opinions in the committee has been disclosed on the same day, and from February 2016, the names of members expressing dissenting opinions have been revealed, ensuring transparency.

Especially, Governor Lee, who earned the title of "the first governor to be reappointed in 44 years," was appointed as a director of the Bank for International Settlements (BIS) in November 2018, his first year of reappointment, and was reappointed as a director in November last year, contributing to raising Korea's stature.

Governor Lee is scheduled to hold a farewell press conference on the afternoon of the 23rd, where he will share his reflections on leading monetary policy over the past eight years and deliver his final message. The market expects his last message to emphasize "interest rate hikes."

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