BOK chief, finance minister vow firm actions to achieve growth in 2018

South Korea’s top two economic policymakers on Thursday vowed to manage risk factors under the common goal of maintaining the nation’s economic recovery momentum this year.

Concerning the recent appreciation of the Korean won, they said that they will take necessary measures against excessive fluctuations in the foreign exchange market.

“Despite some downside risks here and abroad, the Korean economy achieved considerable growth last year on the back of strong fiscal policies,” Bank of Korea Gov. Lee Ju-yeol said in a breakfast meeting with Deputy Prime Minister and Finance Minister Kim Dong-yeon.

“The economy is expected to continue its recovery pace this year, but there are still risk factors so we need to keep watch.”

Minister Kim reciprocated that he will cooperate with the central bank in attaining the 3 percent growth target in 2018.

The ministry earlier said that the economy is expected to grow by 3 percent this year, following last year’s 3.2 percent. It also predicted the country’s per capital gross national income to surpass the $30,000 threshold.

“This meeting is to strengthen policy coordination between fiscal and monetary authorities,” Kim said.

Their meeting was their fourth round of policy talks since Kim took office in June last year, marking an exceptionally frequent encounter between the finance minister and central bank chief.

After their opening remarks, the two top officials engaged themselves for some 100 minutes in an exclusive closed-door meeting.

Kim and Lee also addressed the issue of the Korean won appreciation, pledging to take a firm stance against excessive fluctuations in the foreign currency rates, though they refrained from drastic actions.

The Korean won has for months been climbing amid the global trend of the weakening US dollar. The local currency hit a three-year high on the first day of the year, standing at 1,061.2 won against the US dollar.

“Our unfaltering principle is that the foreign exchange rates are to be determined by the market,” Lee told reporters after the meeting in answer to related questions.

“But we will keep close watch on the market and come up with regulatory measures in case of excessive fluctuations.”

The monetary chief added that the upcoming key interest rate hike will depend upon various factors such as inflation and growth rate, not just on the foreign exchange market situation.

In November last year, the BOK raised the nation’s base rate from the record-low 1.25 percent to 1.5 percent, marking the first increase in more than six years and raising the speculations for further increases in the upcoming years.

By Bae Hyun-jung (tellme@heraldocorp.com)