[2024 National Audit] Lee Chang-yong: "Lowering the Base Interest Rate Is Not a Cure-All"

Lee Chang-yong, Governor of the Bank of Korea, is attending the Bank of Korea's audit by the Planning and Finance Committee held at the Bank of Korea in Jung-gu, Seoul, on the 14th, waiting for the audit to begin. Photo by Kang Jin-hyung aymsdream@

Lee Chang-yong, Governor of the Bank of Korea, stated that "it is true that lowering the base interest rate is not a panacea for the economy."

At the National Assembly's Planning and Finance Committee audit on the 14th, Governor Lee emphasized, "While lowering interest rates certainly plays a role, I believe we must also consider various structural factors," adding, "Several restructuring papers released by the Bank of Korea discuss these issues."

He made these remarks in response to a question from Kim Young-hwan, a member of the Democratic Party of Korea, who argued that "not all economic problems can be solved by lowering interest rates and that fiscal policy must be pursued simultaneously."

Regarding a question from Choi Ki-sang, also from the Democratic Party, about whether the recent interest rate cut is expected to stimulate private consumption, he explained, "The effect of a single interest rate cut will not be significant," and added, "Since we have now started the pivot (policy shift), the effect on domestic demand will vary depending on how many times and at what pace further cuts are made."

He also reiterated his previous stance in response to a question from Hwang Myung-sun of the same party about the impact of future interest rate cuts, saying, "We need to observe the effects after about a year."

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