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Bank of Korea Gov. Lee Ju-yeol/Courtesy of Bank of Korea

BOK chief stresses ‘timely strategies’

Bank of Korea Gov. Lee Ju-yeol hinted at the possibility of cutting down the benchmark rate amid the Sino-US trade conflicts, which weigh on Asia’s fourth-largest economy.

In a speech commemorating the central bank’s 69th anniversary on June 12, Lee talked about “timely strategies,” which observers say insinuates the potential rate cut.

Earlier in May, its monetary policy meeting kept the benchmark interest rate unchanged at 1.75 percent for the fourth straight session.

In our monetary policy operations, we will work to ensure that stable growth is sustained and inflation converges to its target over a medium-term horizon, while paying close attention to financial stability,” Lee said.

Considering that uncertainties about external factors have heightened significantly, especially with respect to the US-China trade dispute and the semiconductor industry, we will act appropriately depending on changes in economic conditions while closely examining the related trends and impacts.”

Toward that end, Lee said that “BOK should formulate policy implementation strategies for various scenarios so that we can cope with changes in domestic and external conditions in a timely manner.”

Lee also noted that economic uncertainties keep plaguing the economy.

Economic growth has faltered this year, as the pace of increase in consumption has slowed amid declines in exports and investment. Going forward, government expenditures are expected to expand and slumps in investment and exports to ease. However, it is judged that uncertainties surrounding the growth path have further increased,” he said.

This stems from changes in the external environment. There is a higher possibility that global trade could shrink with the deepening trade dispute between the US and China. The recovery of the semiconductor industry could come later than expected. As Korea depends heavily on exports led by specific industries, growth is bound to be influenced by how these uncertainty factors evolve.”

 

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