More aggressive fiscal, monetary actions may be necessary if deflation lasts, BOK
- 5 years ago
The economy was the focus of today's parliamentary audit and rival parties engaged in a heated debated over the possibilty of deflation.
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Korea's central bank governor Lee Ju-yeol said more aggressive fiscal and monetary policies will have to be implemented if the possibility of deflation is apparent in the near future.
This was his answer to lawmakers' questions during the annual parliamentary audit of the National Assembly's Strategy and Finance Committee about the possibility of monetary easing going as low as zero percent territory.
But Lee emphasized that deflation is unlikely to happen at the moment.
He added that interest rates cannot be lowered infinitively, so determining the lowest point rates can be dropped should be a priority.
The minor opposition Bareun Mirae Party lawmaker Yoo Seoung-min questioned the central bank's adjustment of interest rate by 0-point-25 percentage points because of its lack of effectiveness, as the circulation rate of money has decreased dramatically since the financial crisis in the early 2000s.
The central bank governor embraced the criticism saying that the ripple mechanism of monetary policies is not the same as in the past and so its effect is limited.
He also said that due to slowing growth of global economy and slow recovery in the semiconductors sector, domestic growth has become even more unpredictable.
"While the U.S. is maintaining a good growth trend, other advanced economies and emerging economies such as China are suffering from weak exports and investment due to weak global trade. Korea's economic slowdown will continue for a while, but its degree will be influenced by the outcome of U.S.-China trade negotiations."
Meanwhile during the parliamentary audit of the trade, industry, energy, SMEs, and startups committee, SME minister Park Young-sun said smart factories implemented to strengthen competency in the manufacturing industry have increased productivity by 30 percent and employment by an average of 3 people per factory.
CHOI Jeong-yoon, Arirang News.
has more.
Korea's central bank governor Lee Ju-yeol said more aggressive fiscal and monetary policies will have to be implemented if the possibility of deflation is apparent in the near future.
This was his answer to lawmakers' questions during the annual parliamentary audit of the National Assembly's Strategy and Finance Committee about the possibility of monetary easing going as low as zero percent territory.
But Lee emphasized that deflation is unlikely to happen at the moment.
He added that interest rates cannot be lowered infinitively, so determining the lowest point rates can be dropped should be a priority.
The minor opposition Bareun Mirae Party lawmaker Yoo Seoung-min questioned the central bank's adjustment of interest rate by 0-point-25 percentage points because of its lack of effectiveness, as the circulation rate of money has decreased dramatically since the financial crisis in the early 2000s.
The central bank governor embraced the criticism saying that the ripple mechanism of monetary policies is not the same as in the past and so its effect is limited.
He also said that due to slowing growth of global economy and slow recovery in the semiconductors sector, domestic growth has become even more unpredictable.
"While the U.S. is maintaining a good growth trend, other advanced economies and emerging economies such as China are suffering from weak exports and investment due to weak global trade. Korea's economic slowdown will continue for a while, but its degree will be influenced by the outcome of U.S.-China trade negotiations."
Meanwhile during the parliamentary audit of the trade, industry, energy, SMEs, and startups committee, SME minister Park Young-sun said smart factories implemented to strengthen competency in the manufacturing industry have increased productivity by 30 percent and employment by an average of 3 people per factory.
CHOI Jeong-yoon, Arirang News.