[Exclusive] Transition Team Facing 'Price Emergency'... Plans Private Meeting with Bank of Korea

Private meeting scheduled after the 15th of this month
Maintained distance considering independence but recent meeting request
Rising inflation and supplementary budget... Transition team faces growing concerns
Yoon also received a separate report that day and instructed top priority tasks

President-elect Yoon Suk-yeol is presiding over the secretariat meeting at the 20th Presidential Transition Committee in Tongui-dong, Jongno-gu, Seoul, on the morning of the 5th.
[Image source=Yonhap News]

Last month, as consumer prices exceeded 4%, the Presidential Transition Committee decided to call in officials from the Bank of Korea, responsible for price stability, to discuss countermeasures. Initially, the Transition Committee maintained a distance by not scheduling separate briefings or meetings to respect the independence of the central bank, the Bank of Korea. However, as inflationary pressures intensified, they requested a private meeting.

President-elect Yoon Seok-yeol also separately summoned economic subcommittee secretaries within the Transition Committee on the same day, instructing them to prioritize measures addressing the cost of living for ordinary citizens as the top agenda for the new administration.

A Transition Committee official told Asia Economy on the 6th, "We have agreed to meet with the Bank of Korea privately after the 15th of this month," adding, "We plan to address urgent issues including the rapid rise in prices." Although the issues are urgent, the date was set after the Financial Monetary Policy Committee meeting scheduled for the 14th, to avoid any misunderstanding that the Transition Committee might be influencing the Bank of Korea's base interest rate decisions by meeting beforehand.

The reason the Transition Committee decided to engage with the Bank of Korea is the urgency of the inflation problem. According to Statistics Korea and the Bank of Korea, last month's consumer price inflation rate exceeded 4% for the first time in 10 years and 3 months, and the expected inflation rate, which indicates future price forecasts, also rose by 0.2 percentage points in the same month. Although the situation is effectively a 'price emergency,' neither the government nor the Transition Committee has presented a suitable solution. The Ministry of Economy and Finance announced measures the previous day, such as expanding the reduction of fuel tax and providing temporary fuel price-linked subsidies to stabilize prices, but many believe these effects will be temporary.

In particular, the Transition Committee is deeply concerned about inflation as it is also pushing for a supplementary budget of up to 50 trillion won, a campaign pledge of President-elect Yoon. While publicly stating that the supplementary budget and inflation are separate issues, there is a high possibility that injecting money into the market through the supplementary budget will lead to a decline in currency value and further price increases, increasing the burden on the next government.

Unlike previous transition committees, which did not plan separate meetings with the Bank of Korea, the current committee's sudden move to engage with the Bank reflects this sense of crisis. Accordingly, there is growing weight to the possibility of discussing a policy mix approach that appropriately combines monetary policy, such as interest rate hikes, and fiscal policy.

The Transition Committee has also begun reviewing separate measures to stabilize prices. On the morning of the same day, President-elect Yoon received a report at his office in Tongui-dong from Chu Kyung-ho, secretary of the Planning and Coordination Subcommittee, Choi Sang-mok, secretary of the Economic Subcommittee 1, and Lee Chang-yang, secretary of the Economic Subcommittee 2, on the causes and background of consumer prices exceeding 4% for the first time in 10 years in March, as well as the ripple effects on the public, emphasizing the management of livelihood policies.

Won Il-hee, the Transition Committee’s senior deputy spokesperson, said in a briefing on prices that "President-elect Yoon was informed that various indicators and inflation forecasts remain bleak not only in the first half but also in the second half of this year, and he instructed that this be pursued as the new government's top priority despite the difficult domestic and international circumstances." He added, "The Transition Committee recognizes the current economic situation, including price trends, with gravity and urged the government to prepare extraordinary measures for the cost of living, including an additional 30% reduction in fuel tax."

A Transition Committee official also said in a phone interview, "We are taking the current price situation seriously," and "In addition to the policies announced by the government the day before, we are reviewing what more the Transition Committee can do." Inside and outside the committee, there are expectations that measures such as slowing the pace of the supplementary budget and curbing increases in public utility fees like electricity and gas will be discussed. Senior deputy spokesperson Won said, "(The transition members) are concerned about the situation where public utility fees are rising following inflation."

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