BoK an­nounces four new board mem­ber can­di­dates

The Pak Banker - - COMPANIES/BOSS -

The Bank of Korea named four new can­di­dates for its board as slow­ing eco­nomic growth and wan­ing ex­ports put the spot­light on mone­tary pol­icy and in­crease pres­sure on the BOK to con­sider fur­ther cuts to bor­row­ing costs. The nom­i­nees are: Lee Il Houng, the head of Korea In­sti­tute for In­ter­na­tional Eco­nomic Pol­icy, who was rec­om­mended by the BOK. Cho Dong Chul, the chief econ­o­mist for state-run Korea Devel­op­ment In­sti­tute, who was rec­om­mended by the Finance Min­istry.

Koh Se­ung Beom, the Stand­ing Com­mis­sioner of Fi­nan­cial Ser­vices Com­mis­sion, who was rec­om­mended by the FSC. Shin In Seok, the head of Korea Cap­i­tal Mar­ket In­sti­tute, who was rec­om­mended by the Korea Cham­ber of Com­merce and In­dus­try.

The can­di­dates -- who are rec­om­mended by dif­fer­ent or­ga­ni­za­tions and serve a four-year terms -- need to be ap­proved by Pres­i­dent Park Geun Hye. The re­place four pol­icy mak­ers whose terms on the seven-mem­ber board end on April 20.

"Of the names that were men­tioned today, only the stance of KDI's Cho is well known in the mar­ket as a dovish per­son in fa­vor of pro­mot­ing growth," said Park Jong Youn, a fixed­in­come an­a­lyst for NH In­vest­ment & Se­cu­ri­ties Co. "Still, with growth and in­fla­tion not sat­is­fac­tory, the cur­rent ad­min­is­tra­tion is un­likely to ap­point a hawk­ish mem­ber. I ex­pect two rate cuts within the year."

Speak­ing af­ter the an­nounce­ment, Cho said: "I will try my best to make the most ap­pro­pri­ate de­ci­sion un­der given con­di­tions."

The Korea Devel­op­ment In­sti­tute, where Cho works, said in its 2016 eco­nomic re­port re­leased late last year that mone­tary pol­icy should main­tain an ac­com­moda­tive stance as in­fla­tion­ary pres­sure will re­main weak for now. It also said that ex­ports had be­come a hur­dle to Korea's eco­nomic re­cov­ery.

Shin has called for more ef­forts on the in­ter­na­tion­al­iza­tion of the won. "Le­gal bound­aries need to be eased to in­ter­na­tion­al­ize the won and ef­forts are needed to boost real de­mand" for the cur­rency overseas, he said in July last year, ac­cord­ing to Yon­hap In­fo­max.

Lee said at a sem­i­nar ear­lier this year that Korea's tra­di­tional growth driv­ers like ex­ports and the prop­erty mar­ket were slow­ing, and noted that house­hold debt was a re­straint to con­sump­tion.

FSC's Koh said by phone af­ter the an­nounce­ment that Korea's econ­omy is in a dif­fi­cult situation. He de­clined to com­ment on mone­tary pol­icy.

The BOK held the pol­icy in­ter­est rate at a record low 1.5 per­cent this month, un­changed since a cut in June 2015. Four­teen of 22 econ­o­mists sur­veyed by Bloomberg see the bank cutting the rate fur­ther this year, with the rest see­ing no change.

BOK Gover­nor Lee Ju Yeol said af­ter the March 10 rate de­ci­sion that the cur­rent rate is ac­com­moda­tive enough and that rate cuts may have lim­ited im­pact when ex­ter­nal un­cer­tain­ties are high.

The shift in board com­po­si­tion was one un­cer­tain fac­tor for the tim­ing of a rate cut, as new mem­bers may need time to as­sess the econ­omy. Among the mem­bers to leave April 20 are the hawk­ish Moon Woo Sik, and the dovish Ha Sung Keun, who called for the BOK to cut the pol­icy in­ter­est rate by 25 ba­sis points this month.

While both the cen­tral bank and gov­ern­ment project South Korea will man­age about 3 per­cent growth this year, econ­o­mists are less op­ti­mistic, ex­pect­ing 2.6 per­cent ex­pan­sion, ac­cord­ing to a Bloomberg sur­vey.

Korea's ex­ports are pro­jected to fall for a 15th straight month in March amid a global slow­down, while in­fla­tion is ex­pected to re­main be­low the 2 per­cent tar­get due to cheaper oil and weak do­mes­tic de­mand.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.