BOK chief voices hope for policy coordination with finance ministry

Bank of Korea (BOK) Gov. Rhee Chang-yong on Monday voiced hope for policy coordination and information sharing with the government as he visited the finance ministry for the first time ever as a central bank chief.

Rhee visited the ministry in the central city of Sejong to attend a town hall meeting on structural reform for the sustainable economy along with Finance Minister Choi Sang-mok, according to the Ministry of Economy and Finance.

“In the past, the BOK and the finance ministry were not supposed to interact with each other very much. But we are adapting to the demand for changes as information exchanges and policy coordination are needed between the two as the pillars of the macroeconomy,” Rhee told reporters.

“I hope this visit serves as a chance to continue policy cooperation,” he added, expressing gratitude for the ministry’s efforts to manage fiscal policy stably and help the country achieve the inflation target of 2 percent.

Choi called Rhee’s visit “historic,” as Rhee became the first South Korean central bank chief to visit the ministry.

“The BOK and the ministry will now be close cooperation partners, though the relationship still is based on the independence of the central bank,” Choi said.

Asked about the BOK’s upcoming rate-setting meeting, Rhee said he “will not comment on the matter today” and will later explain about the effects of state policy measures after having consultations with its board members.

In August, the BOK froze the key rate at 3.5 percent, unchanged since February 2023, despite moderating inflation, and Rhee said it needs to consider rising home prices and surging household debts as crucial factors for a possible rate cut despite sluggish domestic demand.

During a local forum last week, Choi said that the government puts greater policy priority on how to prop up domestic demand over household debts, though he fully respects the BOK’s rate-freezing decision.

The upcoming rate-setting meeting is scheduled to take place on Oct. 11 amid expectations for a rate cut.