Bank of Korea Governor “goes beyond conditions of 0.25% hike”… Big Step Preview

  • Lee Chang-yong (second from left), Governor of the Bank of Korea, answers a reporter’s question
    Bank of Korea Governor Chang-yong Lee hinted at the possibility of a so-called ‘big step’ by raising the base rate by 0.50 percentage points all at once next month.

    After the emergency macroeconomic and financial meeting held at the Bank Hall in Myeong-dong, Seoul on the morning of the 22nd, Governor Lee responded to a reporter’s question, “Is the increase of 0.25 percentage points still valid ?” “The prerequisites for the 0.25 percentage point increase have changed a lot,” he said.

    “The biggest change since the forward guidance we gave you over the past few months is that market expectations for the final US Federal Reserve interest rate have risen significantly to more than 4%, as Chairman Powell said this morning here,” said Lee. “We (Bank of Korea) were expecting stability of 4%, but expectations have changed a lot,” he explained.

    “As there are two to three weeks until next month’s Monetary Policy Committee, we will review the impact of these precondition changes on growth trends and the foreign exchange market closely with the members of the Monetary Policy Committee to determine the size and timing of the increase in the basic rate. ,” he said.

    In addition, Governor Lee emphasized that “how the exchange rate affects inflation and what policies should be implemented to hold it is a major liability (Bank of Korea).

    This is interpreted to mean that the increase in the exchange rate, which drives up import prices, will also be considered as a major variable in determining the direction of monetary policy going forward.

    Lee Chang-yong, governor of the Bank of Korea, beats his pole at the Monetary Policy Committee
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