Choo Kyung-ho "Caution on Won Value Decline... Careful on Adding Employment to Bank of Korea's Establishment Purpose"

[Asia Economy Reporter Seo So-jeong] Choo Kyung-ho, nominee for Deputy Prime Minister and Minister of Economy and Finance, stated that it is a time to approach the foreign exchange market with special vigilance.

According to the National Assembly's Planning and Finance Committee on the 1st, Choo said in his written response to questions submitted to Jeong Seong-ho, a member of the Democratic Party of Korea, "It is a time to inspect the foreign exchange market with special vigilance to prevent the negative effects of the depreciation of the Korean won from spreading to the domestic real economy and financial markets."

He emphasized, "Due to the recent acceleration of monetary tightening by the U.S. Federal Reserve (Fed) and concerns over economic slowdown caused by China's lockdown measures, external uncertainties have greatly increased, leading to a continuous rise in the won-dollar exchange rate. If there is a sudden supply-demand imbalance or excessive one-sided expectations deviating from major currency trends, timely efforts to stabilize the market are necessary."

Regarding the appropriate base interest rate level, Choo refrained from commenting. He said, "The base interest rate is independently determined by the Monetary Policy Committee, and it is not appropriate for the government to make specific remarks on this. As the Governor of the Bank of Korea has stated, the Monetary Policy Committee is expected to operate monetary policy with a focus on price stability while comprehensively considering growth, household debt, financial markets, and changes in major countries' monetary policies."

He added, "In a situation with significant domestic and external risks, it is important to operate an optimal policy mix through sophisticated coordination and complementary roles between monetary and fiscal policies to manage the macroeconomy stably. The government will closely cooperate with the Bank of Korea, frequently share perceptions of the economic situation through various channels, and strengthen cooperation for policy coordination."

Regarding the proposal to add 'employment stability' to the Bank of Korea's establishment purpose and policy objectives, he expressed a somewhat negative stance. He pointed out, "While I agree that the central bank should pay attention to employment stability, employment results from a complex interplay of factors such as economic conditions, demographic structure, and labor market policies, so achieving this goal solely through monetary policy tools, such as interest rate cuts, is difficult."

He added, "A comprehensive review is needed to determine whether it is appropriate to assign uncontrollable goals to the central bank as its responsibilities."

The National Assembly confirmation hearing for nominee Choo is scheduled to be held on the 2nd.

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