Last Monetary Policy Meeting of the Four Monetary Policy Committee Members

Term Ends on the 20th... Former Ambassador to the U.S. Cho Yoon-je and Others Mentioned as New Commissioners

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Four new members of the Monetary Policy Committee (MPC), which determines the monetary policy of the Bank of Korea, are expected to be announced next week. Since more than half of the total seven members will be replaced, the monetary policy stance may change depending on the composition.

According to the Bank of Korea on the 9th, the terms of MPC members Ilhyung Lee, Dongcheol Cho, Seungbeom Ko, and Inseok Shin will expire on the 20th, and new MPC member candidates are expected to be announced next week. Although the new MPC members were originally scheduled to be announced last week, the announcement was postponed until after the MPC meeting due to the importance of the meeting that day.

MPC members of the Bank of Korea are appointed by the president, with one recommendation each from the Ministry of Economy and Finance, the Bank of Korea, the Financial Services Commission, the Korea Chamber of Commerce and Industry, and the Korea Federation of Banks. The MPC decides on monetary policy matters such as policy interest rates and open market operations.

There is an analysis that the MPC will appoint figures closer to doves (favoring monetary easing) rather than hawks (favoring monetary tightening) to maintain balance. Gong Dongrak, a researcher at Daishin Securities, said, "Considering the neutral stance of Governor Juyeol Lee, it is highly likely that hawkish and dovish figures will be balanced in the composition," adding, "If members are appointed with only one stance, it is difficult to identify blind spots in the market and to comprehensively observe changes in market conditions and economic indicators." Governor Lee, Deputy Governor Myeonsik Yoon, and MPC member Jiwon Lim are all classified as hawkish.

Among the candidates for the next MPC member is Professor Yoonje Cho of Sogang University Graduate School of International Studies (former ambassador to the U.S. and recommended by the Ministry of Economy and Finance). Professor Cho was once considered a strong candidate for the Bank of Korea governor before Governor Lee’s reappointment in 2018. He is an international organization veteran with experience at the World Bank (WB) and the International Monetary Fund (IMF), and is highly regarded for his financial expertise.

If Professor Cho, who served as an ambassador to the U.S. at the ministerial level, is appointed as an MPC member at the vice-ministerial level, he will be referred to as a "governor-level MPC member." Attention is also focused on whether an MPC member from the Bank of Korea will emerge. Among the current candidates for MPC membership, Youngkyung Seo, head of the Korea Chamber of Commerce and Industry’s Sustainable Growth Initiative (SGI) and former deputy governor of the Bank of Korea, and Min Jang, senior researcher at the Korea Institute of Finance and former director of the research bureau, are classified as Bank of Korea insiders.

There is also speculation about the possibility of the first-ever reappointment of an MPC member. Until now, there has never been a case of MPC member reappointment. However, due to the increased uncertainty in finance and the real economy caused by the recent COVID-19 pandemic, it is analyzed that reappointment could enable stable operation of the MPC.