Bank of Korea Governor Nominee Flags Further Policy Tightening

South Korea’s central bank governor nominee Rhee Chang-yong had vowed to continue tightening monetary policy to tame inflation, although at a pace less aggressive than expected of the U.S. Federal Reserve.

Rhee told parliament on Tuesday that while there are more downside risks to the country’s growth, the Bank of Korea (BOK) needs to reduce its accommodative stance to bring down inflation, which is currently double the bank’s 2 percent target.

“I will try to adjust the accommodative extent of monetary policy at an appropriate pace with caution in mind not to hurt growth momentum and also engineer financial stability, including a soft landing in household debt, through such action,” said Rhee.

Rhee noted that South Korea’s economy faces headwinds from effects of the Ukraine war, the Federal Reserve’s aggressive monetary tightening, and a growth slowdown in China due to a resurgence of COVID-19 cases.

Last week, the BOK raised its key rate to 1.50 percent, the highest since August 2019, to fight inflation.

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