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Rhee Chang-yong, director of the Asia and Pacific department at the International Monetary Fund (Yonhap) |
South Korea’s central bank chief nominee Rhee Chang-yong on Thursday pledged to carry out a balanced monetary policy as the nation deals with a growing economy and inflation risks.
Rhee, director of the Asia and Pacific department at the International Monetary Fund, and tapped by outgoing President Moon Jae-in as the next Bank of Korea governor, expressed concerns of existing external uncertainties -- including the Russia-Ukraine crisis -- that have been fueling high inflationary pressure and economic risks.
“The US Federal Reserve’s monetary policy normalization has been gaining pace, the spread of omicron variant has been slowing down China’s economic growth and the Ukraine crisis is heading into more uncertainties -- Korea’s economy is at the brunt of the uncertainties,” Rhee said in a nomination speech released to the press.
“I will cooperate with the monetary policy board members and make best efforts to overcome the obstacles presented by the existing risks based on my past eight year-experience at the IMF,” he added.
The governor nominee said he it is a great responsibility to lead the central bank at such an important time.
Rhee remained cautious on the details of his policy and management plans, saying it will be shared at the mandatory parliamentary hearing set to take place soon before he takes office.
Rhee’s nomination by Moon on Wednesday stirred controversy as incoming President-elect Yoon Suk-yeol’s office continued to deny the outgoing president’s claims that prior consultations took place before the announcement.
The tension continued to escalate on Thursday with Yoon adding that Rhee’s nomination was “improper,” explaining to reporters that though the outgoing Moon administration currently has legal rights to tap a key official, it has failed to consider the stance of the incoming administration.
The nomination only fueled the ongoing power struggle between Moon and Yoon, with both sides delaying a traditional planned meeting and failing to bridge their differences over a myriad of issues in addition to key nominations.
Concerns of a possible leadership vacuum at the BOK were heightened before Wednesday’s nomination.
Rhee’s nomination comes at a trying time when the BOK has to steer the nation’s monetary policy amid high inflationary pressure and as the US Fed has begun tapering its bond buying and started indicating an interest rate hike as early as March 2022.
The BOK ended 15 months of a record-low interest rate of 0.5 percent by delivering its first pandemic-era rate hike of 25 basis points to 0.75 percent in August last year. It had cut the key rate to a record low of 0.5 percent in May 2020 to cushion the economy from pandemic woes. Since August, the BOK has carried out two additional rate hikes in November and January this year, pushing up the base rate to the current 1.25 percent.
In February, the BOK maintained its growth outlook for the South Korean economy at 3 percent for this year. But the central bank raised its inflation growth outlook to 3.1 percent from the previous 2 percent.
By Jung Min-kyung (
mkjung@heraldcorp.com)
