Lee Ju-yeol “No level of concern for inflation… The growth rate is higher than 3%”

Bank of Korea Governor Lee Ju-yeol said that the Bank of Korea is not yet at the level of intervening in response to the continued inflation concerns. It gave a positive outlook that the domestic growth rate forecast would be higher than the previous 3%.

The Bank of Korea announced on the 24th that Governor Lee Joo-yeol recently conducted a Q&A on major issues with an access reporter.

Regarding concerns over inflation, Governor Lee said, “Based on the inflationary outlook, we are not in a situation to respond with monetary policy because of concerns about the expansion of inflation risks.” As it cannot be ruled out the possibility of becoming, we will respond carefully by carefully examining the inflation situation.”

As inflation concerns are growing, especially in the US, the rise in oil prices is expanding in Korea. With the price of agricultural and livestock products soaring, the rate of increase in consumer prices is rising from 0% to 1%. It is likely to rise to the high 1% level in the second quarter, and it is expected to fluctuate from the mid to late 1% level in the second half.

Governor Lee said, “It is expected to be higher than the previous forecast of 1.3% annually, but it is expected to fall below the 2% level of the price stabilization target.”

The forecast for the domestic growth rate is also expected to increase.

Expectations for a global economic recovery are rising as the supply of vaccines expands in the context of expanding macro-policies in major countries. The US also has a large-scale additional fiscal stimulus plan confirmed, and vaccination is also progressing faster than planned, and the outlook for this year’s growth has been revised significantly.

Governor Lee said, “For the domestic economy, the growth of exports and facility investment will be higher than originally expected,” he said. “If the National Assembly executes an additional budget, it will act as a factor to further increase the growth rate this year.”

He then emphasized, “Although uncertainty remains, the domestic growth rate this year will be higher than the previous forecast.”

However, it dismissed the possibility of an early rate hike.

He said, “As the real economy is still not reaching its potential level, it is difficult to say that the Korean economy has recovered from the Corona 19 shock and has returned to its normal trajectory.” .

He added, “We will always communicate smoothly with the market regarding the direction of future monetary policy management and take care not to cause shock or confusion.”

After the end of Corona 19, it is expected that a major change will come in the overall economic structure. It mentioned three aspects: production (reorganization of the international trade order), consumption (non-face-to-face and digitization), and distribution (income inequality).

Governor Lee said, “As the global supply chain becomes vulnerable after Corona 19 in terms of production, the trend of increasing domestic production and diversifying the supply chain to strengthen stability will continue.” There is a possibility.”

In terms of consumption, while online shopping and delivery services are active, the growth of related platform companies is likely to continue, while the position of offline companies is likely to weaken, he said.

In terms of distribution, improvement in inequality between sectors and classes is expected to be difficult in a short period of time.

Governor Lee said, “Even after the pandemic, it will act as a factor that hinders the improvement of income inequality.” “Even the gap in education opportunities and individual adaptation to digital technology changes can lead to income inequality.”

He explained that the size of the simple purchase of KTBs by the Bank of Korea will depend on how smoothly it can absorb liquidity through the issuance of currency-stabilized securities, the sale of RP, and deposits in the currency-stability account. He added that “simple purchase of KTBs for market stabilization” was referred to the simple purchase of KTBs.