Candidate Chang-yong Lee for the governor of the Bank of Korea announced on the 1st that it was a ‘sub-priority’ in consultation with the Financial Services Commission for ‘mid- and long-term’ household debt through an interest rate reversal policy in ‘support through coordination’ of government growth by maintaining low interest rates.
Candidate Lee told reporters on the first day of work, "The rate of interest rate increase in the US can be fast, and it is natural that the interest rate gap between Korea and the US is likely to decrease or reverse." acknowledgment policy.
Regarding the excessive household debt that Lee had pointed out during his tenure at the IMF, Lee said, “The growth rate may slow depending on the interest rate (the state of having a lot of household loans). If you do, the quality of household loans may deteriorate, so it should be resolved in the mid- to long-term.”
He continued, “When I become governor of the BOK, I will discuss how to implement policies on the household debt issue with the Financial Services Commission and the Financial Supervisory Service. We will try to make a soft landing of the household debt problem through interest rates.”
Regarding the policy to tolerate interest rate reversal caused by the US interest rate hike, he said, "I don't think the interest rate reversal between Korea and the US will lead to capital outflow considering Korea's fundamentals."
In Japan, the yen has been weakening recently due to the inversion of interest rates with the US.
"If the interest rate gap widens, the won depreciates and the impact on inflation is more concerned," he said.
The IMF said in a statement on the economic impact of the Ukraine war on the 5th that "the situation is very fluid and the economic outlook is very uncertain, but the economic impact is already very serious."
Regarding the central bank's task of stabilizing prices, he said, "It is natural that there is a tension between the central bank, which values price stability, and the government, which aims for growth. The global monetary policy trend is shifting toward taking such conflicts for granted and reconciling them.”
He continued, “The central bank’s policy should comprehensively look at the impact of inflation, growth, financial stability and macroeconomic overall, and proceed in a way that is consistent with the government’s policy,” he said. I don't know how it will be In such a case, it is the BOK’s job to say that we do not know what we do not know.”
Germany's March inflation rate was 7.3%, the highest in more than 40 years. Spain's March inflation rate (9.8%) was also the highest in 37 years, and the impact of the Ukrainian war on inflation has already been confirmed.
"Rather than predicting what will happen, I think we should focus on how to manage macroeconomic risk in a situation of great uncertainty no matter what happens," he said.
Germany and Russia have approached the use of euros to settle gas trade payments, and India and Russia have recently agreed to mutual settlements in rupees and rubles.
Japan took advantage of India's Russian gas payment and approached an economic cooperation system to expand investment in India.
Regarding the loan deregulation and fiscal expansion policy of the transition committee, he said, “(Considering the underwriting committee), there is a micro aspect of loan deregulation or fiscal policy for the first time in life or for the self-employed and small business owners.” “We will look at how fiscal and interest rate policies affect the macro economy and strive for policy coherence,” he said in a subordinated approach to support for maintaining low interest rates.
Regarding the 'natural' and 'psychological' position of the Korea-US interest rate inversion, he said, "If the interest rate between Korea and the US reverses, first, capital outflow will be severe. The possibility depends not only on interest rates but also on expectations about how the exchange rate will change in the future, and on how the fundamentals of the economy as a whole will change. stipulated
He continued, "Now, if you look at the Asian economy as a whole, even if the Ukraine crisis occurs, Asia is in a better state than Europe or Latin America. I think there are still few," he confirmed his confidence in the 'Yongin' policy.
He continued, "Rather, the concern is that if the interest rate gap widens, the exchange rate will depreciate. , the interest rate gap itself is very high because the US has very good fundamentals and high growth rate right now, and therefore the rate of interest rate increase in the US is very high. He announced that Korea would allow interest rate reversal due to dependence on the US economic system.
The trade deficit in March was $63.48 billion in exports, up 18.2% from the previous month, but $63.62 billion in imports, up 27.9%, and a deficit of $140 million.