BOK Governor Shin, Finance Minister Koo Pledge Monetary-Fiscal Policy Coordination at First Meeting

Bank of Korea Governor Shin Hyun-song and Deputy Prime Minister and Finance Minister Koo Yun-cheol met over breakfast on April 23 and pledged policy coordination to address domestic and external economic risks. The meeting came three days after Shin took office on April 21.

At the meeting in Seoul, Shin said monetary and fiscal policy must work in harmony as the Middle East conflict unfolds and growth and inflation pull in opposite directions.

He called it meaningful that the two sides shared the same understanding of economic conditions and said they would consult regularly not only on immediate issues but also on institutional improvements and structural reform.

Koo said close coordination between fiscal and monetary policy was important amid heightened financial-market volatility. He added that the exchange rate was an area where the Bank of Korea and the Ministry of Economy and Finance needed more detailed consultations.

Referring to the BOK's research function, Koo said he hoped the central bank would actively provide views as the government seeks to rebuild growth potential through structural reform.

According to the BOK, the two sides shared their view that the war in the Middle East poses downside risks to growth and adds to inflation pressure.

They also agreed to continue cooperating to stabilize financial and foreign-exchange markets, where volatility remains elevated, and to actively pursue won internationalization through steps including 24-hour foreign-exchange trading and the establishment of an offshore won settlement system.

The two also discussed the direction of key policy tasks, including boosting growth potential, easing polarization, and advancing artificial intelligence, the green transition and a hyper-innovative economy.

Speaking to reporters after the meeting, Shin said first-quarter gross domestic product growth of 1.7% came in well above forecasts and showed the resilience of the South Korean economy.

Asked for details of the exchange-rate discussion, he said only that the two sides had discussed the issue broadly.

Park Sang-kyung, Hankyung.com reporter, highseoul@hankyung.com