Deputy Prime Minister and Minister of Strategy & Finance Kim Dong-yeon and Bank of Korea Governor Lee Ju-yeol had a meeting on August 16. There, they called on the Blue House (Presidential Office) to refrain from direct market intervention. This remark was to respond to the Blue House’s recent comment that the current base rate, 1.25%, is rather low.
During their meeting, they also discussed financial market conditions under the North Korea nuclear risk, fiscal policy, budgets for next year, methods for economic restructuring, etc.
“Base rate determination is something to be carried out by none other than the Monetary Policy Committee of the Bank of Korea and it is not appropriate for a government official to talk about it,” the Deputy Prime Minister mentioned. “I completely agree with the Deputy Prime Minister with regard to the independence of monetary policy,” the central bank governor remarked.
An anonymous industry source said that the Blue House went too far by mentioning an adequate level of the base rate in that financial market participants cannot but sensitively respond even to a minor issue. He went on to say that the meeting of the two was to send this message to the Blue House. After the meeting, they said they would meet with each other every two to three months. This is regarded as a move for the Bank of Korea and the Ministry of Strategy & Finance to show a consistent direction of economic and monetary policy.