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Information session to verify the status of operation of the inflation stabilization objective
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▲ Bank of Korea Governor Lee Joo-yul is speaking at a reporters conference on the afternoon of the 17th to check the operational status of the price stabilization target at the Bank of Korea in Jung-gu, Seoul. |
Governor Lee said this at the reporter’s briefing for the year-end and year-end review of the operating status of the price stabilization target that took place that day.
The inflation stabilization targeting system should be reviewed every two years in terms of the conditions that need improvement in relation to inflation targeting or accountability, and this year is the corresponding year.
Governor Lee said, “Consumer prices increased only 0.5% from January to November this year compared to the previous year, and were significantly below the 2% target for price stabilization.” “The inflation rate of personal services has slowed considerably because the inflationary pressure on the demand side has weakened,” he diagnosed. He said: “Next year, the economy will improve compared to this year,” he said. “Next year, consumer price growth is expected to be around 1%.”
Governor Lee said: “Since our economic growth path is highly dependent on the extent of Corona 19 spread, we plan to pursue future monetary policies accordingly. He said:” We have recently thoroughly inspected and consulted with the government. “.
In the context of the agreement to maintain the current inflation targeting system, if the spread of Corona 19 gradually subsides through the supply of Corona 19 vaccines and treatments, the rate of recovery of the inflation rate to the consumer will be slow, but will expect it to gradually approach the target price. Furthermore, in a situation where economic uncertainty has increased due to the spread of Corona 19, there is said to be a concern that such uncertainty could further increase if the method of operation of the target price stabilization system is changed. Governor Lee added: “In addition, the recent decline in inflation is a common phenomenon not only in Korea, but also in major countries such as the United States and Europe, and we also consider that the central banks of most major countries, excluding the Fed, they maintain the price stabilization target system. ”
Governor Lee also said, “Although central banks in many countries maintain the existing price stabilization target system, they are also taking a closer look at the limitations of the price stabilization target system due to changes in the economic structure. As the effectiveness of monetary policy diminishes under the inflation targeting system, the central banks of the major countries are looking for new monetary policy systems to complement or replace the price stabilization targeting system. ”He said that” the BOK is constantly reviewing measures to improve the monetary policy system, referring to the progress of the revision of the monetary policy system of the main countries. ”
Meanwhile, with the recent proposal for an amendment to the BOK Act to add job stability to the purpose of establishing the BOK, President Lee said, “I fully sympathize with the basic purpose of the amendment to the law that should improve the quality of life. of people and support sustainable growth. ” He said: “However, it is true that when the duty to secure employment is added, there are considerable difficulties in the actual operation of monetary policy.” Inflation and financial stabilization mean that when job security is added to existing policy objectives, three responsibilities must be achieved simultaneously using a base interest rate method. It’s hard to say that it could lead to a weakening of the central bank’s credibility.
He added: “Related discussions are expected to develop around the National Assembly in the future.”
Reporter Song Doo-ri [email protected]
