By Oh Young-jin
Next time the Bank of Korea (BOK) Governor Kim Choong-soo speaks of what sounds like a hint at an impending key rate hike, be sure to think when, because the chance is that he means next year rather than next month.
During a BOK-hosted seminar for reporters in Incheon over the weekend, Kim said, “When you turn on a signal for a right-hand turn while driving, it doesn’t necessarily mean that you make the turn at the next corner.”
Kim said this, when he was pressed by reporters about market reactions to the fact that Kim caused confusion by indicating an immediate rate hike in order to preempt inflation without acting on his word.
Of course, it is interpreted as his way of cautioning the media or market players not to try and over-read his intentions, especially regarding rate policy.
Some argue that his traffic signal comparison doesn’t make sense because it is logical that when you turn on a signal to turn, you have to follow up on it and make a turn as you indicated or risk causing an accident.
Kim is often under fire for being too cozy with the government since he took over the central bank in April.
In the latest case of rate policy confusion, Kim repeatedly dropped hints for another rate rise that went up a fraction in July after being frozen for close to one and a half years. Since then, the BOK has kept the rate unchanged.
In a rare public show of discontent, one member of the seven-member Monetary Policy Committee, which is responsible for deciding on the rate, criticized Kim through a newspaper column of overly representing the committee, saying that Kim chairs the committee but all seven committee members including Kim should have an equal say.
In other words, Kim’s repeated references to inflationary pressures may have been appropriate as BOK chief but not as a committee member.
Since the committee acts as a well-disciplined body, the remarks were taken as a sign that Kim’s leadership is in doubt.
In response, Kim told reporters that the committee member in question didn’t behave responsibly, saying, “I don’t think it proper to speak of his personal opinion.”
The BOK governor also refused to disclose the meeting minutes about the committee meetings, saying that it could only amplify “noise.”