BOK Governor Says Rates Shouldn’t Be Used to Counter Temporary Supply Shocks
Summary
- The Bank of Korea’s Monetary Policy Board said it held the benchmark interest rate at 2.50%%.
- Governor Rhee Chang-yong said it is preferable not to respond to temporary supply shocks with interest-rate adjustments.
- He said a policy response would be needed if the shock persists and leads to broader inflationary pressure and unstable inflation expectations.
Forecast Trend Report by Period
Bank of Korea Governor Rhee Chang-yong said on July 10 that it is preferable not to respond to temporary supply shocks with interest-rate adjustments, given policy lags.
Rhee spoke after the Bank of Korea’s Monetary Policy Board held the benchmark interest rate at 2.50% and said the basic principle of monetary policy in response to supply shocks is clear.
If the shock persists, broadens inflationary pressure and destabilizes inflation expectations, a policy response would be needed, he added.
Rhee remained cautious about the geopolitical risks now unfolding. He added that it is still difficult at this point to judge how the situation in the Middle East will develop.
Park Sang-kyung, Hankyung.com reporter, highseoul@hankyung.com
Korea Economic Daily
hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.
