Town Hall Meeting in Sejong
Gathering of Finance and Monetary Chiefs
The heads of the fiscal and monetary authorities avoided giving a direct answer on the possibility of an interest rate cut in October during their meeting on the 30th. Lee Chang-yong, Governor of the Bank of Korea, said, "I will not comment today," while Choi Sang-mok, Deputy Prime Minister and Minister of Economy and Finance, only referred to it as "(the Bank of Korea's) exclusive domain."
Deputy Prime Minister Choi and Governor Lee made these remarks around 11 a.m. at the Central Building of the Government Complex Sejong while meeting with reporters. Governor Lee's visit to the Ministry of Economy and Finance was a reciprocal visit following Deputy Prime Minister Choi's visit to the Bank of Korea in February, but this is the first time the head of the monetary authority, who has maintained a subtle tense relationship with the fiscal authorities based on the independence of monetary policy, has directly visited the fiscal authorities.
When asked whether he sees an interest rate cut as a factor that could cause instability in housing prices and household debt, Governor Lee replied, "The Monetary Policy Committee meeting is on the 11th (of next month)," and said, "It would be appropriate to discuss the effects of current government policies with the MPC members and comment during the MPC meeting," thus avoiding a direct answer.
Regarding structural reforms to address the low birthrate issue, Governor Lee said, "Structural issues are connected not only to fiscal matters but also to education and welfare, and the Ministry of Economy and Finance is the only body that can coordinate matters across ministries," adding, "What the Ministry of Economy and Finance must do is policy coordination and leadership."
He continued, "We plan to make many proposals so that the Ministry of Economy and Finance, which has the authority to implement policies, can carry out good policies," and said, "Creating a cooperative relationship regardless of past practices is of significant importance."
Deputy Prime Minister Choi said, "One of the tasks we are discussing today involves innovation, social mobility, and population. Regarding the urgent issue of population, we will seek opinions and discuss ways to respond together."
On the same day, Governor Lee toured the Central Building in Sejong and held a town hall meeting under the theme "Untying the Gordian Knot of the Korean Economy: Structural Reform for a Sustainable Economy."
Regarding his visit to the Ministry of Economy and Finance, Governor Lee said, "In the past, exchanges between the Bank of Korea and the Ministry of Economy and Finance were limited as a matter of custom, but we are adapting to the demands of the times that require information exchange and policy coordination as the two pillars of the macroeconomy."
He added, "I think this is something that even highly independent foreign central banks do to meet the demands of the times," and said, "I hope this will be an opportunity for continued policy coordination." He also noted, "The duty of monetary policy is price stability, and the Ministry of Economy and Finance's efforts to maintain stable fiscal policy contributed to achieving a 2% inflation rate earlier than other advanced countries."
Deputy Prime Minister Choi said, "This was my fourth visit to the Bank of Korea as Minister of Economy and Finance, but it is the first time the Bank of Korea Governor has visited the Ministry of Economy and Finance," calling it a "historic event." He also said, "If the relationship between the Bank of Korea and the Ministry of Economy and Finance has been somewhat tense based on independence, I think it is now firmly established as an independent but close cooperative partnership."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
