Outgoing BOK chief warns of prolonged inflation

Outgoing Bank of Korea (BOK) Governor Lee Ju-yeol, left, receives a plaque in appreciation of his service during his farewell press conference at the BOK headquarters in central Seoul, Wednesday. Yonhap

Lee praises incoming governor Rhee as 'versatile'

By Yi Whan-woo

Bank of Korea (BOK) Governor Lee Ju-yeol warned of prolonged inflation and called for the need to reduce risks regarding financial imbalances during his farewell press conference, Wednesday.

Lee, whose term will end on March 31, put concerns over the benchmark interest rate decision aside ahead of the BOK's board meeting scheduled for April 14.

He noted that the base rate is decided based on the consensus of the multiple board members and it will not be disputed by the temporary absence of the central bank chief.

His comment came as the BOK is highly likely to go on without a leader for the time being, before incoming Governor Rhee Chang-yong takes office.

President Moon Jae-in on Wednesday named Rhee, director of the Asia and Pacific Department at the International Monetary Fund (IMF), to succeed the current governor, Lee. His official appointment, however, is likely to come only after April 14, as it requires parliamentary approval and other relevant processes that can last for a month.

“It is forecast that inflation will be on an upward trajectory for a considerable amount of time, and it remains crucial to reduce risks in financial imbalances,” Lee said in his speech.

He viewed that the BOK's “preemptive” rate hikes since August allow “room for maneuvering in monetary policy” when considering the fact that the U.S. Federal Reserve is poised to raise interest rates faster than what many expected throughout the year.

“But even so, the situation will be not favorable,” he warned.

Regarding the time interval between his departure and Rhee's appointment, he said that it should not be problematic for the BOK in terms of carrying out its mission.

He spoke of Rhee as “versatile” in many sectors, adding, “He has been outstanding in terms of knowledge, policy and his international network.”

“He is far better than me, so I can't think of any possible advice for him if you ask me,” he told reporters.

Lee has been serving at the top post of the central bank since 2014, after being appointed by then-President Park Geun-hye. His tenure was extended for another four years under President Moon, making him the first central bank governor to serve under two presidents.