Deputy Prime Minister Hong Nam-ki and Bank of Korea Governor Lee Ju-yeol agreed to an increase in inflation through a high-growth system that took advantage of the large-scale economic stimulus of the United States, and showed the strengthening of the rent-for-profit economy by maintaining low interest rates.
The Bank of Korea announced on the 2nd that Deputy Prime Minister Hong and Governor Lee reached an agreement on the 2nd to "maintain the current stance and adjust the degree of monetary policy easing so that the economic recovery can be felt by the supplementary budget policy" to reduce the cumulative side effects of financial imbalances.
The National Statistical Office announced on the 2nd that the inflation rate in June was 2.4% higher than the same month of the previous year and continued to rise at the 2% level for the third consecutive month.
On the 29th of last month, Deputy Prime Minister Hong handed over 33 trillion won of 'super supplementary budget' to the parliament and announced '1.1 trillion won of win-win consumption support for card cash back' to maximize consumer drama.
Deputy Prime Minister Hong said, "The cashback policy is expected to have an effect of boosting private consumption by about 11 trillion won," Yonhap News Agency said. Hong Nam-ki's 'Faithful move'" headline reported, "We have decided to return 10% of the amount of additional consumption expenditure that exceeds the average monthly card usage by more than 3% in the second quarter to the consumer."
Consumer price inflation rose 0.6% in January, 1.1% in February, 1.5% in March, 2.3% in April, 2,6% in May, and 2.4% in June. A great departure from the highlands,
On the 24th of last month, the U.S. Congress agreed to a $1.2 trillion (1358 trillion won) infrastructure expenditure submitted by the Biden administration, signaling large-scale investment projects in roads, bridges, passenger freight, rail broadband access, public transportation, and airports.
The International Monetary Fund (IMF) announced on the 1st that it has raised its forecast for US GDP growth from 4.9% to 7%.
Due to the large-scale construction industry in the United States, the price of petroleum products has risen sharply from the rise in international oil prices, and in the Korean consumer price index, oil prices surged 19.9% in June compared to the same month of the previous year, raising the overall price by 0.74 percentage points.
Rent in Korea rose 1.4% from the same month in the previous year in the June index of the National Statistical Office, while jeonse prices soared by 1.9% and monthly rent rose by 0.8%, so that the rental seeking economy began to overtake the profit seeking economy.
On the 24th of last month, Governor Lee officially announced the base rate hike as a 'increase within this year', saying, "It is necessary to normalize monetary policy in an orderly manner at a time not too late within this year."
At a press conference to check the operation status of the inflation target on the same day, Governor Lee said, “As the economic recovery accelerates, inflation pressure will be higher than it is now.” “The current interest rate level was unusually lowered in line with the crisis of Corona, and it will be normalized within this year in line with the economic recovery. It is a natural process,” he said.
The BOK's announcement on the agreement between Deputy Prime Minister Hong and BOK Governor said, "Fiscal policy is to compensate for the damage to growth potential and consumption power caused by the corona shock, as embodied in the economic policy direction for the second half of the year and the second supplementary budget plan, and expand the economy to vulnerable sectors. It is necessary to maintain the current stance for the time being so that the recovery can be felt, and monetary policy adjusts the degree of easing in line with the improvement of the economic situation to reduce side effects such as the accumulation of financial imbalances caused by prolonged low interest rates.
The BOK announced that the bilateral agreement is “expected to continue to drive a solid economic recovery with exports and investment, but face-to-face services and employment have not yet fully recovered, so difficulties in the livelihood economy such as job and income decline for the vulnerable will continue. "Fears are growing about the accumulation of risk of financial imbalance due to the concentration of funds in the asset market and accumulation of household debt," he said.
According to the Wall Street Journal on the 29th of last month, the S&P CoreLogic Case-Shiller National Home Price Index surged 14.6% from the same period last year due to a shortage of construction workers and a shortage of raw materials in accordance with the US construction stimulus package, the biggest increase in 34 years since statistics were compiled. reported
The American Hankook Ilbo reported, “South California is breaking a new record of price increase compared to the same period of the previous year for 10 consecutive months until May. The median home price for May in Los Angeles County was $775,000, up 25% from the previous year. The median price in Orange County in May was $895,000, a 19.3% increase from the previous year. The number of units for sale decreased 20.6% from the previous year to 1.23 million units, while the number of units for sale soared 23.6% from the same month of the previous year. The 23.6% growth rate is the highest in 22 years since 1999,” it reported on the 25th of last month.