The nominee for Bank of Korea(BOK) governor has indicated that additional hikes of the benchmark interest rate will be inevitable to tame rapid inflation, should he take office.
Rhee Chang-yong shared his monetary policy views in a written report submitted to the National Assembly Strategy and Finance Committee on Monday ahead of his parliamentary confirmation hearing the next day.
Regarding the Bank of Korea’s decision last week to raise the benchmark rate by a quarter percentage point to one-point-five percent, Rhee said it was “properly” made and is in line with the direction he thinks the central bank needs to go in.
Asked whether it is desirable to raise the key rate, the former director of the IMF’s Asia and Pacific Department agreed, saying inflation will likely persist for a considerable amount of time while recovery continues.
It will be desirable to pursue a monetary policy in the direction of stabilizing prices by adjusting the pace of monetary easing, he said.
Rhee, however, cautioned against substantially raising the key rate at once, saying there is no immense need to adjust the rate by over zero-point-25 percentage points at a time.
As to addressing the nation’s growing household debt, the nominee emphasized continued employment of macroprudential policies such as debt-service-ratio(DSR) regulations, in addition to monetary policy tools.
Source: KBS World Radio