Deputy Governor of BOK: "Possibility of Increased Financial Market Volatility... Heightened Credit Caution"

The Bank of Korea Holds the '2022 Monetary Policy Workshop'

[Image source=Yonhap News]

Lee Seung-heon, Deputy Governor of the Bank of Korea, expressed concerns on the 1st that the sharp tightening policy in the United States could increase volatility in the international financial markets, and that domestic financial markets have also become more cautious, particularly in the real estate project financing asset-backed commercial paper (PF-ABCP) market.

In his welcoming remarks at the '2022 Monetary Policy Workshop' on the same day, Deputy Governor Lee stated, "The domestic and international conditions surrounding our economy are severe." He added, "Last week, the Bank of Korea forecasted that the consumer price inflation rate would fall to around 3% in the second half of next year, but uncertainties remain high," and said, "growth is also projected to decline by 0.4 percentage points from the August forecast to 1.7% next year due to the global economic downturn."

He continued, "Externally, against the backdrop of the Federal Reserve's sharp policy rate hikes, the US dollar is strengthening, and liquidity in the US Treasury market is deteriorating, which suggests the potential for increased volatility in the international financial markets," emphasizing, "domestically, credit caution has recently heightened, especially in the PF-ABCP market."

Deputy Governor Lee added, "Given the challenging policy environment, I expect today's Monetary Policy Workshop to be a meaningful occasion," and requested, "I ask that you provide many frank evaluations and unreserved opinions from an academic and professional perspective."

The workshop on this day was held for professors in macroeconomics and finance from domestic universities. In Session 1, discussions focused on economic trends, financial stability conditions, and future monetary policy directions, while Session 2 covered topics such as 'Regional Housing Price Trends and Risk Assessment' and 'Evaluation of Conditions for Ulsan's Economic Rebound and Tasks for Growth Virtuous Cycle.'