SEOUL– The outgoing chief of the Bank of Korea (BOK) called Thursday for serious discussions on the possibility of change in the roles of the central bank beyond its main obligation to keep inflation in check in line with growing demand for it to have more interest in growth, employment and other social issues.
BOK Gov. Lee Ju-yeol made the call in his farewell speech before leaving office on Thursday after eight years at the helm. He will be replaced by Rhee Chang-yong, a senior official of the International Monetary Fund, who was named to lead the central bank last week. Rhee is preparing for a parliamentary confirmation hearing widely seen as a formality.
“The global financial crisis resulted in adding financial stability to the list of obligations for the BOK, and recently growing social attention on employment has promoted discussions in some quarters on how this can be reflected in the central bank’s monetary policy management,” Lee said.
“In addition, a central bank has to pay attention to problems linked to polarization and inequality. Going forward, expectations for and reliance on a central bank will increase as much as economic solutions are taken to tackle social problems,” he added. “It would be inevitable that the roles of a central bank will change should there be changes in economic structure or overall environment.”
Lee emphasized that the foundation on which a central bank should stand is public faith, which can be generated if its policy is “consistent” and “predictable,” saying that he has worked hard to achieve the objective, though there must have been room for improvement.
He is credited with helping the pandemic-ravaged economy navigate through the coronavirus pandemic by aggressively lowering the BOK’s policy interest rate to record lows and moving quickly to raise borrowing costs in recent months to tamp down inflation.
The BOK has hiked its policy rate three times since August last year — a combined 0.75 percentage point increase — as inflation pressure has built up amid surging oil and commodity prices.
Worries have still mounted that steep rate hikes could weigh on growth of the economy still grappling with the fallout of the pandemic.
Source: Yonhap News Agency