Outgoing BOK chief warns of 'long' inflation

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Outgoing BOK chief warns of 'long' inflation

Published: 23 Mar. 2022, 17:04

Bank of Korea Governor Lee Ju-yeol, left, receives a plaque of appreciation at a farewell press conference in central Seoul on Thursday. Lee finishes his term on March 31 after serving eight years. [BOK]

Bank of Korea Governor Lee Ju-yeol is leaving the central bank this month after serving for eight years.

Lee, 69, was the third governor in the central bank’s history to serve two terms, and the first to extend his term after a change in party in control of the Blue House. He has worked for Bank of Korea for 43 years.

“It’s true that the Korean economy faces a number of difficulties and I don’t feel comfortable leaving them behind,” said Lee during a farewell press event held on Wednesday.

“Uncertainties have become permanent as the global economy grows complex and entangled amid an economic environment that is changing at an ungraspable speed. That will all make policy enforcement more difficult in the future.”

Lee mentioned the importance of gradually raising rates along with the Fed and in consideration of inflationary pressure that is expected to continue for “a considerable amount of time.”

Lee stressed the need for the Bank of Korea to cooperate with central banks overseas and international organizations as the global economy gets more interlinked and Korea’s economy expands.

Lee started working for the central bank in 1997 after studying business at Yonsei University. He went on to earn a master’s degree in economics from Pennsylvania State University. He was appointed Bank of Korea Governor in 2014 by the Park Geun-hye administration. His term was extended by the Moon Jae-in administration in 2018.

Lee will likely be remembered for having raised interest rates before the Fed and stabilizing the foreign exchange market through signing of currency swaps.

During his term, Lee cut Korea's benchmark rate nine times and upped it five. The rate was 2.5 percent when he became governor. He cut it to a record low of 0.5 percent following the pandemic, and has pulled it up to 1.25 percent in his final months.
Lee signed or extended currency swaps with key countries, including Canada and Swiss.

During his term, Lee went through a chain of events that affected monetary policy: an outbreak of Middle East Respiratory Syndrome, Brexit, escalated U.S.-China trade conflict, Japanese export restrictions on Korea, Covid-19 and the Russia invasion of Ukraine.

Lee was Korea’s first central bank governor to be elected to the board of the Bank of International Settlements (BIS) in 2018. The BIS is a group made up of 60 central banks. Korea joined the BIS in 1997. Lee’s three-year role at BIS began in 2019 and he was reelected last year. He will be stepping down as he finishes his term as the central bank governor.

Rhee Chang-yong, a director of the Asia and Pacific Department at the IMF, was nominated by the Blue House on Wednesday to succeed Lee.

Rhee will become the next Bank of Korea governor after he passes a confirmation hearing. It took Lee around 20 days after he was nominated governor and started the role, according to the Bank of Korea.

The next monetary policy meeting is scheduled for April 14.

BY JIN MIN-JI [jin.minji@joongang.co.kr]