Bank of Korea's Swift Response to Market Reactions

Following remarks by Bank of Korea (BOK) Governor Rhee Chang-yong on quantitative easing (QE), the financial markets experienced significant volatility. In an effort to mitigate the fallout, the BOK has issued clarifications to reassure investors and stabilize the markets.

Choi Yong-hoon, director general of the Financial Markets Department at the BOK, emphasized the potential risks of adopting QE in Korea, including currency depreciation and increased foreign exchange market volatility, in a detailed blog post.

Understanding the Controversy

Governor Rhee's initial comments at a policy symposium raised eyebrows as he pondered the feasibility and desirability of QE policies in Korea, leading to speculation about lower terminal interest rates and a subsequent drop in government bond yields.

The BOK was quick to dispel rumors of imminent QE measures, distributing materials to clarify its stance and emphasizing that no such considerations were underway.

Governor Rhee's Bewilderment

Expressing confusion over the market's reaction, Governor Rhee clarified that his remarks were part of a broader discussion on long-term monetary policy, not an indication of current policy directions.