High Exchange Rate Freeze... "What We Need Now is an Additional Supplement"

BOK holds first Monetary Policy Committee meeting this year and freezes key interest rate at 3% per annum
Contrary to expectations, 5 out of 6 members of the Monetary Policy Committee choose to freeze
Political unrest in the aftermath of the emergency martial law ↑…Consideration of Surging Exchange Rate

[Anchor]
The Bank of Korea (BOK) eventually froze its key interest rate due to the high won-dollar exchange rate.

However, he was very concerned about the economy and stressed the need for an extra budget, which is the government's fiscal policy.

I'm reporter Lee Hyungwon.

[Reporter]
The Bank of Korea held its first Monetary Policy Committee meeting this year and maintained its benchmark interest rate of 3% per annum.

Contrary to expectations that freeze and cut opinions will be tight,
Five of the six members of the Monetary Policy Committee, excluding Bank of Korea Governor Lee Chang-yong, chose to freeze.

This is because the won-dollar exchange rate soared as political instability grew due to the aftermath of the emergency martial law.

The volatility has increased to over 1,500 won,
Assuming the
1,470 won range, we forecast that prices could rise by 0.15%p this year.

[Lee Chang-yong / Governor of the Bank of Korea: When you look at the exchange rate of 1,470 won, it went up about 30 won for martial law and political reasons, and that's a lot higher than our (economic) fundamentals. If you go up to the higher exchange rate and you go up to the oil price, the impact will be even greater.]


Frozen after hard work to put out the urgent fire of the high exchange rate, but
Looking at the
economy, it is natural to lower interest rates immediately.

It feared that growth in the fourth quarter of last year could fall below 0.2% as domestic indicators were worse than expected due to weak consumer sentiment after martial law.

As a result, all six members of the Monetary Policy Committee have left open the possibility of a rate cut in the next three months.

However, Governor Lee stressed the need for a supplementary budget, which is the government's fiscal policy, in addition to monetary policy.

[Lee Chang-yong / Governor of the Bank of Korea: Last year and this year's growth rate is likely to fall below the last November's forecast of 2.2% and 1.9%, and if it fell by 0.2% (than-expected), wouldn't it be better to supplement that amount? About 15 to 20 trillion won...]

At the same time, he advised that it is desirable to limit the supplementary period as soon as possible and to the target to the difficult self-employed, not all citizens.

I'm Lee Hyungwon of YTN.

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video: Eunkyung Lee
Design: Jeon Whee Lin