Central bank to maintain low rates into 2021
Bank of Korea Gov. Lee Ju-yeol said the central bank will maintain an accommodative monetary policy in 2021 to help the country recover from the economic damage caused by Covid-19.
“The domestic economy is projected to gradually recover, but uncertainties on the path to growth are high and the inflation rate is expected to fall short of the goal,” Lee said in a New Year’s address released on Thursday. “An accommodative monetary policy will be kept until the country is projected to see a stable growth in economy.”
Lee added that a buildup of financial imbalances is concerning.
The central bank will “carefully monitor the development of internal and external risks caused by the prolonged Covid-19 pandemic and the delayed economic recovery that may follow to timely implement measures to stabilize the market,” Lee said, adding the bank will thoroughly analyze and monitor the ability of households and firms to repay debt.
“Looking back, roles of central banks change after an economic crisis. From the Covid-19 crisis, demand for the state central bank’s legal responsibility for job stability has grown larger,” Lee said, noting the difficulties of maintaining policy when trying to meet multiple contradictory goals.
The statement arrived as the number of those employed in the country declined for the ninth consecutive month in November.
Lee said the virus is aggravating the imbalances. He projected small-business operators that offer services offline and low-income groups as likely to be excluded from the recovery if the recovery is K-shaped.
Last month, the central bank maintained its base rate at a record low 0.5 percent. It expects the economy to grow 3 percent in 2021, faster than the previous forecast of 2.8 percent.
BY JIN MIN-JI [firstname.lastname@example.org]
with the Korea JoongAng Daily
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