Gov't reaffirms BOK's independence on monetary policy

SEOUL, Jan. 8 (Yonhap) -- South Korea's vice finance minister said Friday the government has "no doubt" that the setting of monetary policy rests entirely with the central bank.

The government announced Thursday that the vice finance minister will attend the
rate-setting committee of the BOK this year, beginning with Friday's meeting, in
order to voice the government's opinion on overall monetary policy direction and
economic management.
"Basically, the government does not have any doubt over the independence of the
monetary policy (of the central bank)," Hur Kyung-wook told reporters before the
meeting began.
"A lesson from the financial crisis has been the need to coordinate
policies...The government believes that the move (to attend the BOK's policy
meeting) would help improve risk management of the local economy."
The finance ministry policymakers does not have voting right at the meeting, but
the attendance at the monthly rate-setting meeting is unusual as the government
has sought to guarantee the independence of the central bank in its monetary
policy direction.
His participation came as amid signs of an economic recovery, debate has sparked
over when the BOK will hike its key interest rate, which stood at a record low of
2 percent for the 11th straight month in January.
The government has repeated that it will maintain a "expansionary" policy for the
time being as the economic recovery has yet to gain a solid footing.
Observers note that the latest move by the finance ministry might inevitably
undermine the BOK's independence as committee members and the chief of the
central bank could be under pressure when making decisions that are not in line
with the government policy direction.
sooyeon@yna.co.kr
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