Monetary easing will continue through 2020: BOK governor

• Published date: 31 December 2019
• Publication title: The Korea Times

The Bank of Korea (BOK) will continue an accommodative monetary policy in 2020, as external trade uncertainties will keep holding back a short-term economic rebound here, BOK Governor Lee Ju-yeol said in a New Year's address, Tuesday.

"Our monetary policy should be carried out in a way to support the economic recovery and stabilize prices," he said. "We need to keep relaxing currency policies, as economic growth here in 2020 will likely fall below our expectation."

The outlook came in response to the prolonged economic slowdown. In October, Lee also expressed his pessimistic view for the economy to achieve its 2-percent growth target during a regular National Assembly audit.

To revitalize the sagging economy, the BOK cut its key interest rate to an all-time low of 1.25 percent, Oct. 16. The central bank also kept the rate unchanged during the final rate-setting meeting in November 2019.

Lee said the central bank would decide on the level of monetary easing in accordance with how the external risk factors unfold.

"To be specific, the prolonged trade feud between the U.S. and China, even if they have recently made some progress, comes as a geopolitical risk for the local economy," he said. "On the domestic front, we have to raise concerns over weakening growth engines here due to such factors as the low birthrate, aging society and social polarization."

On top of that, the Korean economy cannot rely on export-driven growth amid the weakening of global value chain dynamics that resulted in the economic slowdown here and abroad, according to him.

To tackle the pessimistic outlook for an economic rebound in 2020, the BOK stressed the need to enhance its capability for precise diagnosis and prediction of the economic trend.

"The BOK should be capable of...