[EDITORIALS]Inappropriate movesOn Tuesday, a presidential secretary for social policy visited the governor of the Bank of Korea. It is odd that an official who has nothing to do with monetary or financial policy should meet with the governor of the national bank. It is also hard to understand that the head of the central bank agreed to meet him in the governor’s office. The two said that it was a private meeting and there was no discussion of the interest rate. But still, it is very suspicious that two men at very different levels should meet at this suspicious time.
The presidential secretary is the core figure of the real estate policy led by the Blue House. Recently, the government mentioned at a briefing the necessity of adjusting the interest rate in order to bring real estate prices under control.
It looks as if an official from the Blue House visited the Bank of Korea to demand the interest rate be adjusted, with a meeting of the Monetary Board to be held today. As soon as this news leaked, the bond market fluctuated because the market interpreted the meeting as a precursor to an increase in the interest rate.
Although the two men denied discussing interest rate policy, their meeting was certainly inappropriate. It would be even more so if they actually talked about the interest rate to stabilize real estate prices as the rumor goes. That would be to violate the independence of the central bank at its core.
The monetary policy is the sole responsibility of the central bank. The policy should be decided by the central bank’s judgment, not by the requirements of the Blue House or politicians.
When Park Seung was governor of the Bank of Korea, the bank missed many chances to adjust the interest rate. It is hard to deny that was because of the government’s influence. Compared to those times, since Lee Seong-tae became governor, the bank’s monetary policy has been run quite independently.
However, inappropriate moves and remarks on the real estate policy have been made. When the government insists on changing the interest rate as a way to resolve problems in its real estate policy, it makes one suspect that the government wants to blame the present interest rate for the failure of its real estate policy.
The Bank of Korea should not be influenced by outside forces on adjustment of the interest rate and must stay independent. That’s why the decision of today’s Monetary Board meeting is drawing great attention.