BOK chief says to implement monetary policy ‘flexibly’ amid political, economic woes

The chief of South Korea’s central bank said Friday the country needs to flexibly implement a monetary policy going forward given unprecedented political and economic uncertainties.

In a meeting for the new year with heads of financial institutions, Bank of Korea (BOK) Gov. Rhee Chang-yong said the central bank will decide the pace of its rate cuts while closely monitoring developments of risks at home and abroad and incoming data.

In November, the bank slashed its benchmark interest rate by a quarter percentage point for the second consecutive session to 3 percent amid the slowing economy and uncertainties stemming from the incoming Donald Trump administration.

It marked the first back-to-back rate reduction since February 2009, when the country was reeling from the aftermath of the global financial crisis the previous year.

The BOK is scheduled to hold rate-setting meetings later this month and again next month amid mounting uncertainties stemming from President Yoon Suk Yeol’s brief imposition of martial law and subsequent impeachment.

The Korean won sank to its lowest point in over a decade against the U.S. dollar, and a deadly airplane crash is also negatively affecting already feeble consumer spending.

Against this backdrop, the finance ministry expects the economy to grow 1.8 percent this year, slowing from last year’s estimated 2.1 percent expansion. This year’s growth estimate is also lower than its earlier projection of 2.2 percent.

Rhee also reiterated his support for acting President Choi Sang-mok over his recent appointment of two justices to the Constitutional Court, insisting his decision may have been hard but inevitable for the economy.