Bank of Korea Governor: Continuous interest rate cuts may become a source of concern, will maintain a flexible pace of rate cuts
Bank of Korea Governor Lee Chang-yong said on Thursday that continued interest rate cuts could become a source of concern, and he stated that he would closely monitor risk factors to determine the pace of the central bank's monetary policy. The Bank of Korea is set to make its next interest rate decision this month, while South Korean President Yoon Suk-yeol's brief imposition of martial law ultimately led to his impeachment, triggering the most severe political turmoil in South Korea in decades. "If we continue to cut interest rates, this could become a concern," Lee Chang-yong said in his New Year's address. "We will flexibly decide on the pace of interest rate cuts while closely monitoring the developments of domestic and international risk factors and their impact on the economy." The political turmoil has caused the won to fall to its lowest level since 2009 and has put pressure on the South Korean stock market. Last Sunday, a Jeju Air plane crashed, resulting in the deaths of all 181 passengers and crew on board, with only two survivors, which could further undermine consumer confidence. Lee Chang-yong warned that "under the current circumstances, it is difficult to stabilize the economy relying solely on monetary policy," and the ongoing leadership vacuum could put pressure on the market. In the fourth quarter of last year, as U.S. President-elect Donald Trump prepared to return to the White House, the Bank of Korea unexpectedly cut interest rates consecutively to support the economy against trade headwinds
According to the Zhitong Finance APP, Bank of Korea Governor Lee Chang-yong stated on Thursday that continued interest rate cuts could become a source of concern, and he indicated that he would closely monitor risk factors to determine the pace of the central bank's monetary policy.
The Bank of Korea is set to make its next interest rate decision this month, while South Korean President Yoon Suk-yeol's brief imposition of martial law ultimately led to his impeachment, resulting in South Korea facing its most severe political turmoil in decades.
"If we continue to cut interest rates, this could become a concern," Lee Chang-yong said in his New Year's address. "We will flexibly decide on the pace of interest rate cuts while closely monitoring the developments of domestic and international risk factors and their impact on the economy."
Political turmoil has caused the Korean won to fall to its lowest level since 2009 and has put pressure on the South Korean stock market. Last Sunday, a Jeju Air plane crashed, resulting in the deaths of all 181 passengers and crew members on board, with only two survivors, which could further undermine consumer confidence.
Lee Chang-yong warned that "under the current circumstances, it is difficult to stabilize the economy relying solely on monetary policy," and the ongoing leadership vacuum could put pressure on the market. In the fourth quarter of last year, as U.S. President Trump prepared to return to the White House, the Bank of Korea unexpectedly cut interest rates consecutively to support the economy against trade headwinds