Bank of Korea Veteran Lee Wins Lawmaker Approval to Be GovernorEunkyung Seo
South Korean lawmakers said Lee Ju Yeol, 61, a former senior deputy governor of the Bank of Korea, is qualified to take the top job after Governor Kim Choong Soo’s four-year term ends March 31.
Parliament’s strategy and finance committee approved Lee after he faced questions from lawmakers in Seoul today in the nation’s first hearing to scrutinize an incoming governor.
Lee has 35 years experience at the Bank of Korea and served during Asia’s 1997 financial meltdown, the ensuing won slump and bailout from the International Monetary Fund, a credit-card debt crisis and the global recession. He said today that monetary policy needs to focus on growth for now because inflation isn’t yet a concern.
“It seems investors concluded Lee is not as hawkish as they had expected,” said Park Dongjin, a Seoul-based fixed-income analyst at Samsung Futures Inc. “The nominee tried to be neutral, but still some investors interpreted his comments as bond market-friendly.”
The yield on 3 percent notes due December 2016 fell one basis point, or 0.01 percentage point, to 2.83 percent at the close in Seoul, Korea Exchange Inc. prices show. It earlier rose to as much as 2.85 percent.
While the lawmakers were able to question Lee, they lacked the power to block his appointment. Over about five hours, he was questioned on topics including household debt and the central bank’s communication with investors.
In written responses to lawmakers ahead of today’s hearing, Lee said that policy makers needed to help households prepare for a possible increase in interest rates. On March 13, the BOK left its seven-day repurchase rate unchanged at 2.5 percent for a 10th straight month.
Lee, who’s a professor at Yonsei University in Seoul and has a master’s degree from Pennsylvania State University, faces pressure to avoid tightening too quickly.
Hyun Jung Taik, vice chairman of the National Economic Advisory Council, last month cautioned in an interview against lifting rates now. The government is trying to increase the growth potential of Asia’s fourth-biggest economy to 4 percent, lift employment and achieve per-capita income of nearly $40,000.
The incoming governor will face scrutiny over his attitudes toward predecessor Kim’s efforts to shake up the bank, including Kim promoting younger staff to senior positions.
In 2012, Lee said in his farewell speech that rejecting old values had led to a sense of chaos at the central bank. While he said today that he was “a little embarrassed” about controversy over those comments, he added that the central bank “needs stability as an organization.”