SEOUL– The chief of the Bank of Korea (BOK) met with heads of major local banks Monday and explained the reasons for the central bank’s recent back-to-back rate hike, his office said.
BOK Gov. Rhee Chang-yong held his first meeting with chiefs of nine banks, including KB Kookmin Bank and Shinhan Bank, and the head of the Korea Federation of Banks, late in the day.
It was his first “financial consultation meeting” with major bank chiefs since he took office last month with a four-year term.
During the closed-door meeting, Rhee explained the BOK’s latest decision to hike the benchmark interest rate and discussed key financial and economic issues, according to the BOK.
Other details have not been made available.
The meeting had been held on a regular basis — usually either every quarter or every six months — before the coronavirus pandemic hit the country. The last time the meeting took place was in November 2019.
Monday’s meeting came four days after the BOK raised its policy rate by a quarter percentage point to 1.75 percent as it strives to keep jumping inflation in check.
The recent rate increase was the fifth of its kind since August last year and it also marked the first time in about 15 years that the central bank hiked borrowing costs for two straight months.
Along with the rate hike decision, the BOK also sharply raised its 2022 inflation outlook to a 14-year high of 4.5 percent from its previous 3.1 percent estimate. It lowered its growth forecast for the South Korean economy to 2.7 percent from 3 percent.
Rhee earlier said that the central bank will place more priority on price stability in the months to come as inflation pressure has been mounting at a fast pace.
Monday’s meeting came as Rhee has emphasized the importance of communication with the market on the BOK’s monetary policy directions as he is seeking to enhance policy transparency and stave off any misunderstanding over the central bank’s policy steps.
Source: Yonhap News Agency