“No Need to Change Economic Outlook Yet”… Negative on Preemptive Rate Cuts
“Separating Economic Fundamentals from Political Reasons… Little Impact on Credibility Expected”
(Seoul=Yonhap News) Reporters Shin Ho-kyung and Min Sun-hee — On the 5th, Bank of Korea Governor Lee Chang-yong stated that “Although the martial law situation is inevitably negative news, as the won/dollar exchange rate has slightly risen to 1,410 won, if there are no new shocks, it will gradually decline again.”
Governor Lee responded to a question about the exchange rate outlook following the martial law situation during a press conference.
Regarding the impact of this situation on the economic outlook or monetary policy such as rate cuts, he explained, “A preemptive rate cut requires a change in economic outlook, but since there is no new information at present, there is no need to change the economic outlook.”
Furthermore, concerning the credibility of the Korean economy, he stated, “Unlike major countries where government might collapse due to issues with economic fundamentals or fiscal policy directions, in our case, martial law occurred purely for political reasons,” and emphasized, “Since (Korea) has economic fundamentals and growth momentum that are separate from political reasons, it is unlikely to significantly affect credibility.”
Additionally, Governor Lee mentioned, “The overseas shock regarding this martial law situation seems to be greater,” and remarked on the foreign reaction, “Domestically, we have been observing the political situation, so we can at least guess why this happened, but overseas, it truly came as a shock, and I received so many questions via phone and email that it was really difficult to answer them all.”