Bank of Korea Governor “It’s not exclusion of big steps”… Price stability ‘first’

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Rather than adjusting the base rate by 0.25 percentage points, raising the base rate in two steps, that is, 0.5 percentage points at a time, is called a ‘big step’. Today (16th), the governor of the Bank of Korea hinted at the possibility of this big step.

The key variable is probably the price, reporter Im Tae-woo.

Bank of Korea Governor Chang-yong Lee denied the possibility of a ‘big step’ even at the personnel hearing a month ago.

[김수홍/더불어민주당 의원 (지난달 19일, 국회 인사청문회) : 금리 인상과 관련해서는 빅 스텝을 반대하죠?]

[이창용/한국은행 총재 (지난달 19일, 국회 인사청문회) : 아직까지는 할 필요가 없다고 생각합니다.]

However, at the first meeting with Deputy Prime Minister Choo Kyung-ho today, he changed his position.

[이창용/한국은행 총재 : 제가 앞으로도 그런 빅 스텝을 완전히 배제할 수 있냐, 그런 걸 말씀드릴 수 있는 단계는 아닌 것 같습니다.]

“Until last month, there was no need for a big step, but it is time to judge by looking at how much more prices will rise in the future,” he explained.

It can be interpreted that the price situation has gotten worse enough to consider shock therapy, Big Step, as one of the options.

It is difficult to rule out the possibility of a big step as the new government puts price stability as its top priority.

The bond market was shaken by the unexpected big step remarks, causing the interest rate of KTBs to rise one after another.

It is also interpreted that the Bank of Korea gave a strong signal to raise interest rates further ahead of the Monetary Policy Committee meeting to be held on the 26th.

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[성태윤/연세대 경제학부 교수 : 스태그플레이션이 진행 중인 상황이어서 한미 금리 역전이 발생하게 되면 우리 경제에 부담이 될 수밖에 없는 상황으로 생각되고요. 이러한 부분들이 빅 스텝 형태의 금리 인상 가능성을 열어둔 것으로 판단됩니다.]

The BOK began to evolve as a principled remark as the wave of the big step remarks grew, but it is an analysis that revealed the concerns of the monetary authorities, which had to hold both inflation and the interest burden of ordinary people.

(Video editing: Kim Kyung-yeon)

▶ The ‘shadow’ cast by the suspension of wheat exports to India

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