Lee Seung-heon, BOK Deputy Governor: "Rising Inflationary Pressure... Proactive Monetary Policy Needed"

'21st Century Financial Vision Forum' Hosted Breakfast Seminar
"Focus Should Be on Preventing the Spread of Expected Inflation"

Lee Seung-heon, Deputy Governor of the Bank of Korea / Photo by Kang Jin-hyung aymsdream@

Lee Seung-heon, Deputy Governor of the Bank of Korea, said on the 23rd, "Inflationary pressures are expected to remain high going forward," adding, "Monetary policy should focus on preventing the spread of inflation expectations."

Deputy Governor Lee gave a lecture titled "Recent Changes in Monetary Policy Operating Conditions and the Role of the Bank of Korea" at a breakfast seminar hosted by the '21st Century Financial Vision Forum' held at KAIST Yeouido Campus in Yeongdeungpo-gu, Seoul, on the morning of the same day.

He stated that since the outbreak of COVID-19, the overlapping effects of expansionary policy responses by major countries, rapid economic recovery, and global supply constraints have significantly increased global inflationary trends, causing major changes in central banks' policy environments.

He added, "Going forward, as global supply constraints continue due to the prolonged Ukraine crisis and consumption recovers with the easing of the COVID-19 situation, inflationary pressures are expected to remain high," explaining, "major central banks, including the U.S. Federal Reserve (Fed), are rapidly reducing their previous monetary easing policies to stabilize inflation expectations and achieve price stability."

Deputy Governor Lee emphasized, "As the Bank of Korea is entrusted with the responsibility of price stability, it is necessary to slow down the inflationary trend through proactive monetary policy operations to prevent the elevated inflation rate from leading to anxiety about inflation expectations," stressing, "monetary policy should focus on preventing the spread or prolongation of high inflation expectations."

He continued, "Recent inflationary instability involves a mix of demand and supply factors, and since the inflationary trend is spreading widely, there is a risk of it becoming prolonged through the spread of inflation expectations," adding, "early suppression of inflation anxiety is necessary to promote macroeconomic stability."

The 21st Century Financial Vision Forum was established in November 2002 by top executives in the financial sector and KAIST professors to explore ways to advance Korea's financial industry. It consists of 20 financial institutions, including financial associations, financial holding companies, banks, and securities firms.

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