Bank of Korea Governor Rhee Chang-Yong Discusses Political Turmoil

Well, and we know that the Bank of Career has been trying to allay concerns, wanting to bring calm to the market, and so far we're seeing some revisal and the losses of the one Let's get perspective from the Bokay governor. We have Governor Ri chang Yong joining us from so governor, real good to have you with us. I'm just wondering how you're assessing the fallout in the market so far.

The Marshall law te CREB last night has been lifted within a few hours, and the financial market is stabilizing quickly.

It's a relief that the impact of the market was shortly lived. While it is still true that it's.

Hard to predict the political dynamics, but I believe that the economic dynamics in Korea can be separated from the political dynamics given our strong market fundaventors and also.

The mature democracy.

So do you think you've done enough so far? No?

What is you now is actually I'm very happy that the impact has been short to live. Deepinically, we have to see how these political events will evolve. In the meantime, we focus on providing and pull liquidity to stabilize the market, and when we look at the market, we do not see any matafunctioning.

So but on the other hand, we by.

Expecting that, you know, in preparation for the future possible UH financial unrest, we actually crengthened our liquidity UH injection facilities such as.

UH the increasing our depot purchase of women and also extending our UH illigible securities for open up your operation.

And so far, so far, so far it works well.

Yeah, so far, so good.

But in my conversation with a former trade minister of career, he did talk about how he's expecting prolonged political uncertainties.

How prepared is it being okay for that?

Actually I watched your program.

Actually I think he was more concerned the other structural factors, not only this problem the political issue.

But I think.

It's that yet decided. It's very hard to predict pitch options. The political process really evolved. But I think you know that the created government officers are well trained. We are well experienced in handling the several difficulties. So I think while in government in transition or in this transition period which we believe a couple of months, I think we have many tools and the talented government officers to handle this macro constitution.

The tools include another rate cut.

You did a back to back rate cud in anticipation of Trump's tariffs, which you say, well, weigh on the economy.

Might we see you cut rates even more?

Oh, you mean that because of this prolifical comment. I don't think so, because.

As I mentioned this, this political event was very short to live and I do not see any reason why it has to change our economic outlook. At this moment, we are focusing our gross rate years will be around two point two percent and the next year it will be around nine one point nine percent. But I think we are still at this moment stick to our focus.

But I think I believe that our gross.

Focus will be more impacted by the structure of factors such as a change in grow a valley chain and also you know democraps, the facility rate and democraphy demography in our continue. So these structure factors will be much more important factors in the determining.

What our maintein potest will be and how we change our.

Focus, rather than this political event whichure short lived.

Yesterday, Governor, we know that you have regular meetings with the Finance Ministry also with the financial Regulator.

That meeting now.

Becomes even more important given how the government is now in this array. I'm just wondering, what's the significance of those meetings now and what kind.

Of issues do you think will come forward.

I can be very proud that we call a four meeting financial experts meeting.

I think that this is actually I have been.

Working for many other institutions in many other countries, but I think the communication channel that we developed in the last two years, so this among our full regulators and Finance NEWSS and me we discuss every issue and we are we actually own our independence, but we discuss finance stability tis ever we should need to change our use.

Seven in the morning. Actould say I was top day for me. I'm going to be.

Sleepy, but I think this corporation that can us is means and work very well covering almost every account of issues.

Governor.

I'm just wondering with regards to the meetings that you have with the policymakers in the Finance ministry for instance, I mean, should the framework betweak perhaps to perhaps you know, improve the leadership and uh you know the effectiveness of those meetings given the situation of the government right now, I think.

I like this.

So this informal platform because if it comes formal, you need to prepare and there are a lot of bureaucracy can be involved.

But even now intimacy.

And we can discuss many issues and by ordering our independence and the separate role of the institution has to do, we can do the perfect divisional label. For example, today Career called on the spatial maintain postimmiliating. We focused on the apeity injection today and the financial variety Services focused on the measures how to civilize submarket. And then the MUSU of Finance is coordinating many policies and they actually uh work hard to to develop and you know, uh

You talked about how there is no need to really look at your rate card trajectory. How confident are you about the economy? Bearing in mind that we're seeing protests in the streets. I mean tomorrow we're going to see the current railway workers going to the streets as well in protests. Might that not impact in that's a sentiment. Might not that impact consumption? Might not that impact confidence in the country and the economy.

I probably the factors you mentioned could have been a very important factor if the President didn't accept the National Assembly recommendation to lift the lift the martial law. But given that the marshal law has been lifted, and now I think if you look at the other side of the coin, I think political certainty is actually increased, not decreased, because in the last COPO of a year, I think the tension between the ruling.

Party and o Ovisian Party make everything you dead lack. But now I think this kind of some kind of political can also help our projections.

Yes, as you mentioned, there may be some short term difficulties, but I think if you can look at the other side of coming there is also part of side. And I think if you look at what happened yesterday, actually I'm very I.

Think that you can see that the creacisions and.

Our politicians and our political systems are much more mature and sane.

And I believe you mentioned the.

Label union's protests, but that kind of protest has been around for the last ten years, and if President didn't lift the march at all, that protest could have been agglivated quite signicanty. But I don't think that. Yes, I think regarding the st piachment effort, now there will be some noise, but I.

Think that noise is not as as as we will be a one not be very.

Large compared to the but we have been experiencing so far.

Governory, you're expressing optimism despite the political turmoil, then what scenarios that would worry you?

Look, look, I do not mean that the embassy will be smooth.

I think the last couple of months there will be a lot of tensions among the political parties, and that this is a political debate only as smooth as probably wished for.

But what I mean is that, but.

Those kinds of things are within the realm of what our government officers and experienced government officers and progressions can.

Handle using various tools that we have. And on the other hand, what I'm worrying about is that it's more likely there are a lot of grover uncertainties.

As you mentioned that the major countries you know, colge issues, tarrif and also changing of Robert supply chain, and as you mentioned that the geopolitics in Europe is also quite uncertain.

And what I'm.

Worrying about is if our own problem is, you know, in substances amplify the global uncertainty, then maybe we may have already you know, must difficult then I'm currently expecting.

But I think what we are doing is we have to adapt whatever what has happened so at this moment, whatever happened in politics, whatever happened in britical projections.

I think the government.

Offices like US and central bankers in Creer are ready to react to you.

In verses, we talked to say we should race for volatility, especially in the Korean one. We've seen it move, you know, as low as one and a half percent is recovered somewhat. Is there a red line in the sand for the Korean one? I mean, at what stage will you be defending that currency?

Ain we Preyer has been on the vext E change regime for time, and you know.

We are not taleting for specific level of the exchanging.

But on the other hand, because Korean one is not international vised, we are concerned on the productivity of our exchange day and the pace.

Of the exchange way movement.

So technically, using the integrated polict framework, we are trying to stibilize the.

Ever movement or exchangeway.

But at this moment, I think if you just look at what happened yesterday with separ as I mentioned, the Korean one t push facts sharply about six percent immediately. But now I think we are slightly about the you know, level that we had before the this is political event happens.

So I think in some.

Sense, using various tools including our agility injection you know in the EFTs market too, I think that we are now managing the situation better than.

You know, uh you are some other people. Then, as as my.

Basic point is that if you look at what happened now political arena, this tension happened because of the This event has happened because of prolifical tensions.

Not any problem is coming from the munters. So in that sense, I.

Think the impact it would be sure to leave and we can focus on the economic strengths and the weakness of CRE incoming rather than qualifica.

Side intact, Governor, For investors looking for some kind of clarity on the situation in Korea, what can they expect in the next twenty four to forty eight hours from where you're seated, what can be expected?

I can ask what had changed?

Actually, I think during the night there was six hours you know, uncertainty in signing country now bactive. So as you mentioned, this may cause a more internal fight among the politicians, and you can see those kind of fight.

I wouldn't mention country's name, but you can see many other countries a similar polifical fight at this moment. And then you know this kind of fight is.

Not affecting our fundamentals and change our STOMA operation. And actually, if you look at today, our financial market functions very well.

The risk is there, but I think I'm not downplaying the risks. There is a risk, but like an other countries, but that risk is given. The nature of the risks is within the you know, a range of range of the what you can manage.

Governor, Thank you so much for your time. Governor Yichang Yong joining us live from Seaul