Juyeol Lee: New Year Speech

New Year's address by Mr Juyeol Lee, Governor of the Bank of Korea, at the Bank of Korea, Seoul, 2 January 2018.

Dear fellow members of the Bank of Korea!

Today we start our first tasks of 2018, filled with new hope and resolve. I would like to begin by expressing my heartfelt gratitude to all of you, for so faithfully carrying out your duties throughout the last year even in the midst of difficult conditions.

Last year the trend of growth in our economy picked up gradually, even despite the worsening of our trade conditions vis-à-vis major countries and the increase in North Korea risks, as our exports and facilities investment showed buoyancy in line with the global economic recovery. This improvement can also be said to have owed in large part to the Bank of Korea's accommodative monetary policy to this time. With regard to consumer price inflation, the upward pressures on the demand side were not large last year, but under the influence of supply-side factors including the rising international oil prices, the annual rate of inflation was around our target level of 2%. Given the forecast that the economy would continue to grow at its potential rate going forward as well, and that inflation would approach the target level, conditions were also built up under which the degree of monetary policy accommodation could be adjusted. Judging that holding the Base Rate at the current level under these circumstances could lead to a further expansion in the real degree of accommodation which could entail an increased risk of financial imbalances accumulating, the Monetary Policy Board raised the Base Rate by 25 basis points last November.