Bank of Korea Set to Normalize Policy Stance, Governor Says

The Bank of Korea (BOK) will continue to adjust toward pre-crisis policies in line with economic recovery and to keep an eye on the risk that high inflation lasts longer, according to Governor Lee Ju-yeol.

Lee said in a new year speech that BOK is gradually normalizing its monetary policy stance which had been highly accommodating during the COVID-19 pandemic.

The South Korean central bank had raised its key interest rate twice in 2021 and was the first major Asian economy to do so since the outbreak of the pandemic.

Lee noted that while South Korea’s economy is expected to grow steadily next year with help from exports and investment, the new virus variant Omicron makes it “hard to predict when the pandemic will come to an end.”

BOK will watch growth and inflation trends, financial imbalances and changes in global monetary policy as it decides when to further taper its stimulus, Lee said.

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