Bank of Korea official: The goal of monetary policy is inflation rate, not cost of living

On July 4th, Jinshi Data reported that a senior deputy governor of the Bank of Korea, Ryoo Sangdai, stated that South Korea should try to solve its high cost of living problem through structural reforms rather than relying on the central bank to fight against it, because the main goal of the Bank of Korea is inflation, not price levels. Ryoo Sangdai said, 'Using price levels instead of inflation rates as a target may ultimately increase inflation and economic volatility, as monetary policy would have a reverse reaction to price trends.' At the time of Ryoo's statement, the tone of the Bank of Korea has become increasingly dovish. South Korean President Moon Jae-in stated this week that it may be necessary to cut interest rates. Ryoo declined to comment on interest rates before the policy decision is announced next week, but he said that under the expectation of interest rate cuts, the recent trend of the Korean won seems to be influenced by factors such as the South Korean economy and capital flows.