Lee Chang-yong: "Direction More Important Than Gap in Korea-US Base Interest Rates"

22nd National Assembly Budget Committee Current Issues Inquiry
"No Economic Forecasts Are Accurate" Criticism Met with "All Forecasts Are Conditional"

Lee Chang-yong, Governor of the Bank of Korea, mentioned that the direction of U.S. interest rates is more important than the current gap between the Korea-U.S. benchmark interest rates.

On the afternoon of the 22nd, Governor Lee attended a current affairs inquiry at the National Assembly's Planning and Finance Committee and responded to a question from Hong Young-pyo, a member of the Democratic Party of Korea, who asked, "If the U.S. raises interest rates again, how long can our country hold out with the current benchmark interest rate?" Lee replied, "Rather than the immediate gap, the future interest rate direction set by the U.S. Federal Reserve in September and the international financial market's reaction to it are important." When the U.S. Federal Reserve raised rates in July, the gap between Korea's and the U.S.'s benchmark interest rates widened to 2 percentage points, marking an all-time high.

Governor Lee was reserved about the revised growth forecast and the timing of interest rate cuts. When asked about the timing of rate cuts, he said, "As the Governor of the Bank of Korea, mentioning future interest rates could cause market volatility, so it is only understood internally," and refrained from elaborating. Regarding the possibility of adjusting the growth rate from 1.4%, he dismissed it by saying, "It will be announced on Thursday (when the Monetary Policy Committee meets)."

During the current affairs inquiry, there was also criticism that "since Governor Lee's inauguration, the Bank of Korea's economic forecasts have rarely been accurate." In response, Governor Lee said, "All forecasts are conditional," and added, "Judgments should be made based on whether adjustments were made less or more compared to other institutions."

Bank of Korea Governor Lee Chang-yong is talking with officials at the Planning and Finance Committee plenary session held at the National Assembly on the 22nd. Photo by Hyunmin Kim kimhyun81@

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