Lee Chang-yong: "Current Budget Bill Poses 0.06%P Downside Risk to Growth Rate... Basis for Fiscal Expansion"

National Assembly Planning and Finance Committee Emergency Inquiry
Responded "Not Considered" to Convening Temporary Meeting on Interest Rate Cuts

Lee Chang-yong, Governor of the Bank of Korea, stated on the 17th that "the currently passed budget has about a 0.06 percentage point impact on the economy (growth rate)" and agreed on the need for fiscal expansion, saying, "In a situation where there are downside risks like now, there is a basis to use fiscal policy more."

Bank of Korea Governor Lee Chang-yong is attending the plenary meeting of the Planning and Finance Committee held at the National Assembly on the 17th, responding to questions from lawmakers. Photo by Kim Hyun-min

Governor Lee made these remarks during an emergency inquiry at the full meeting of the Planning and Finance Committee held at the National Assembly in Yeouido, Seoul, in response to a question from Park Hong-geun, a member of the Democratic Party of Korea, asking, "Do you think active expenditure expansion through supplementary budgets is necessary given the downside risks to the economy?"

In response to the question, "If the U.S. lowers its benchmark interest rate in December, wouldn't South Korea also have room to lower rates further?" he replied, "We plan to make a judgment after observing economic indicators for about a month."

Regarding the question about whether an extraordinary session in December is being convened to consider a benchmark interest rate cut, which is being discussed as a short-term economic stimulus measure, he said, "We are not considering that."

When asked about the recent economic situation by Choi Eun-seok, a member of the People Power Party, Governor Lee explained, "Looking at current economic indicators, the number of foreign visitors and exports have not shown significant short-term changes yet, and card usage seems to be slightly decreasing. However, since economic sentiment indicators have fallen significantly, there is still lingering anxiety, so it is important that economic policies proceed without disruption to improve sentiment."