Will 1960-born peers Choo Kyung-ho and Lee Chang-yong work well together?

Eyes on Fiscal and Monetary Policies
Hope for Solutions Amid Offbeat Controversy

Chu Kyung-ho, a member of the People Power Party and the first Deputy Prime Minister and Minister of Economy and Finance nominee under the Yoon Suk-yeol administration, is arriving at the confirmation hearing preparation office set up at the Korea Deposit Insurance Corporation in Jung-gu, Seoul, on the 11th. Photo by Moon Ho-nam munonam@

[Asia Economy Reporter Seo So-jeong] Chu Kyung-ho, the nominee for Deputy Prime Minister of Economy and Minister of Strategy and Finance, has emphasized close coordination with the central bank governor of the Bank of Korea, drawing attention to the combination of fiscal and monetary policies under the new government. Although the need for interest rate hikes is growing amid a double-digit inflation rate exceeding 4% for the first time in over a decade, the government’s announcement of an additional 50 trillion won supplementary budget has sparked controversy over policy discord, making the policy coordination between the two leaders a new challenge.

On the 11th, the financial industry is closely watching the potential impact on future interest rate hikes as Chu hinted at frequent meetings with Lee Chang-yong, the nominee for governor of the Bank of Korea, who was born in 1960 like Chu, and who is commonly regarded as having a shared understanding of macroeconomics as well as experience in real economy and financial policy.

The fact that both leaders previously served as vice chairmen of the Financial Services Commission (FSC) also highlights their similarities. When Lee served as vice chairman of the FSC in 2009, Chu worked alongside him as director of the FSC’s Financial Policy Bureau. Subsequently, Chu served as economic and financial secretary to the president, head of the emergency economic situation room, and vice chairman of the FSC.

In particular, both nominees have repeatedly emphasized the importance of policy coordination through press briefings and other forums. After being nominated as Deputy Prime Minister of Economy the previous day, Chu stated at a press briefing, "The meetings between the Bank of Korea governor and the Deputy Prime Minister will be so frequent that they won’t even be newsworthy."

Lee Chang-yong, the nominee for Governor of the Bank of Korea, is arriving at the confirmation hearing office set up in the Booyoung Taepyeong Building on Sejong-daero, Jung-gu, Seoul, on the 1st, and responding to questions from the press. Photo by Joint Press Corps

The monetary policy leader shares a similar view. Upon his first day at the National Assembly’s confirmation hearing task force office on the 1st, Lee emphasized, "The role of the central bank, which has stressed independence solely aimed at price stability, is now changing significantly," adding, "I will coordinate policies through dialogue with the government."

Notably, under the Moon Jae-in administration, meetings between the Deputy Prime Minister of Economy and the Bank of Korea governor were infrequent, signaling a change. According to the Bank of Korea, the main channels for meetings between the two leaders have been the expanded macroeconomic and financial meetings and the G20 finance ministers and central bank governors meetings. Although occasional informal breakfast meetings were held, regular meetings did not take place.

The financial industry and markets are also paying close attention to how this change in relationship might affect the monetary policy direction meeting scheduled for the 14th, where the base interest rate will be decided.

Ahead of his confirmation hearing on the 19th, Lee responded to a written question from Kim Ju-young, a member of the Democratic Party of Korea, regarding household debt management, stating, "To resolve the household debt issue, continuous signaling of interest rate hikes is necessary." Chu, meanwhile, said, "While the interest rate will be well decided by the Bank of Korea’s Monetary Policy Committee, there is a mission to harmonize it with government economic policies within the range that does not undermine price stability," leaving room for interpretation.