New S. Korean Central Bank governor highlights external economic risks

Seoul, Mar 24 (EFE).- New South Korean central bank Governor Rhee Chang-yong spoke Thursday about the uncertainty external factors such as the Ukraine War are generating on South Korea’s economy, adding he would analyze the situation to dictate monetary policies.

Rhee, nominated Wednesday by President Moon Jae-in’s office to replace Lee Ju-yeol, whose term expires on Mar. 31, is in Washington, working as the International Monetary Fund’s Asia Pacific Department director, and sent a message the bank published Thursday.

Before taking office, Rhee must be questioned by a parliamentary committee next week, although it is considered a mere formality since the chamber’s decision is not binding.

In the statement, the economist spoke of “the growing possibility that the omicron spread in China could slow down its economy at a time when the United States Federal Reserve is accelerating the normalization of its monetary policy.” He said the war in Ukraine makes its effects on other economies “difficult to predict.”

“Given the increase in external uncertainty, fears are growing that domestic inflation and economic risks may increase. I will intensely meditate on the implementation of monetary policies, analyzing growth, inflation and financial stability in a balanced manner.”

Rhee, also a professor of economics at Seoul National University, vice president of the South Korean Financial Services Commission and head of research at the Asian Development Bank, is known for his knowledge of economics and financial markets.

However, his views on monetary policy are unknown as he has never been involved with a central bank at a time when the Central Bank is facing mounting inflationary pressure.

In February, before the invasion of Ukraine began, the entity increased its inflation forecast for 2022 by one point and one tenth to 3.1 percent.

The bank increased interest rates in January by a quarter of a point for the third time in six months, leaving the benchmark at 1.25 percent, its pre-pandemic level. EFE

asb/lds