The Bank of Korea Says "Supplementary Budget Unlikely to Stimulate Inflation"

Bank of Korea:
"The possibility of a supplementary budget causing inflation is low"
"Specific impact depends on expenditure form and timing"

The Bank of Korea stated that the possibility of an additional supplementary budget aimed at responding to the economic slowdown stimulating inflation is low.

On the 14th, according to Assemblyman Cha Gyu-geun of the Innovation Party, a member of the National Assembly's Planning and Finance Committee, the Bank of Korea responded this way to a query asking for the Bank's opinion on the size of a supplementary budget that would not affect prices.

The Bank of Korea said, "The specific impact of the supplementary budget on prices may vary depending on the form and timing of expenditures and the economic situation, so it is difficult to uniformly present the size of a supplementary budget that would not undermine price stability," but evaluated that "the possibility of a supplementary budget aimed at responding to the economic slowdown stimulating inflation is low."

It added, "The government's ongoing price stabilization measures, such as stabilizing agricultural product supply and minimizing factors for public utility fee increases, are also factors limiting the inflation-stimulating effect of the supplementary budget."

Assemblyman Cha Gyu-geun argued, "To raise this year's growth rate to the potential growth rate, additional spending of more than 20 trillion won is necessary," and "a prompt supplementary budget is needed to recover the sluggish domestic demand and people's livelihoods."

He continued, "According to the Hyundai Research Institute, this year's economic growth rate is expected to be only 1.7%, and to raise it to the potential growth rate of 2%, additional fiscal spending of more than 20 trillion won is required, and revenue adjustments must be made to prevent repeated tax revenue shortfalls," emphasizing, "A supplementary budget is urgent for the recovery of domestic demand and people's livelihoods, as well as for efficient fiscal spending."