Joo Sang-young and Park Ki-young Complete Terms as Monetary Policy Committee Members... Complex Feelings in Farewell Remarks

by Seo Sojeong

Published 20 Apr.2023 15:00(KST)

Updated 20 Apr.2023 16:54(KST)

Joo Sang-young, Acting Chair of the Monetary Policy Committee, is presiding over the Monetary Policy Committee plenary meeting held at the Bank of Korea in Jung-gu, Seoul on the morning of April 14. 2022.04.14. Photo by Joint Press Corps

"The (short-term) conflict between price stability and growth, and between price stability and financial stability, seems to have intensified sharply, so I do not feel at ease."

Joo Sang-young, a member of the Monetary Policy Committee of the Bank of Korea, expressed his reflections upon completing his term in a farewell speech on the 20th. Joo was appointed in April 2020, and at that time, the replacement cycle of four MPC members coincided, resulting in an unusual adjustment of the four-year term to three years. Since the start of the current rate hike cycle in August 2021, Joo voiced dissenting opinions and issued a total of five minority opinions during his tenure. In April last year, when the inauguration of the current Bank of Korea Governor Lee Chang-yong was delayed, he also served as the chair of the MPC on behalf of the governor.

Joo stated, "Inflation occurs when demand exceeds supply or when supply is insufficient relative to demand. The main cause of price increases at the beginning of the pandemic was the shortage and disruption of supply due to the spread of infection," adding, "At the same time, on the demand side, there was a demand shift between sectors." He explained, "As service consumption was blocked, demand shifted to goods consumption; within the goods sector, demand moved from non-durables to durables, and within the service sector, from face-to-face to non-face-to-face. Supply disruptions and demand shifts were phenomena unimaginable before the pandemic."

Joo pointed out, "The inflation during the pandemic was differentiated from the past in that prices rose due to supply disruptions in specific sectors, which then caused demand to shift to other sectors, resulting in a chain reaction of price increases. Even though demand decreased in some sectors during this process, price rigidity operated, preventing inflation across the economy from being controlled."

He continued, "Of course, expansionary macroeconomic policies affected prices, but the extraordinary inflation during the pandemic cannot be explained solely by the aggregate concepts of total demand and total supply," and confessed, "Therefore, throughout my tenure, I have pondered whether we should approach the direction and intensity of policy responses from a somewhat different perspective." Joo left room for further reflection, saying, "I do not think a clear answer can be found, but I will continue to observe and contemplate." Formerly a professor in the Department of Economics at Konkuk University, Joo will return to academia to nurture future scholars.

Park Ki-young, Monetary Policy Committee Member

Park Ki-young, the MPC member who raised the base interest rate the most relative to the number of MPC meetings held, said in his farewell speech, "At my inauguration, I said I had great expectations to work with Bank of Korea staff who possess both outstanding ability and humility, and those expectations have been fulfilled many times over," adding, "The density and depth of my concerns have deepened significantly compared to my inauguration."

Park said, "I believe I am the person who has received the most benefits from the Bank of Korea relative to my tenure, and I will do my best to help in areas where I can contribute." Park was appointed in October 2021 and served as an MPC member for one year and six months. His term was shortened to one year and six months as he succeeded former member Ko Seung-beom, who was appointed chairman of the Financial Services Commission. Park, a former professor in the Department of Economics at Yonsei University, will also return to academia.