South Korea’s Monetary Boss Makes Haste Slowly

The case for interest rate cuts in South Korea is compelling. Growth is sluggish, inflation is close to the central bank's target, and policy is still fairly tight. Then there is a months-long political crisis that has weighed on business and consumer confidence. The real question is why the central bank didn't try something bolder than the quarter-point step announced on Tuesday.

This is a tough issue for the Bank of Korea, when it’s required to show leadership; the nation’s president has been impeached, as has the prime minister who temporarily assumed his duties. In moments of financial tumult, central banks are expected to ride to the rescue. But political upheaval is different. The bank wasn't elected, and no doubt, its actions will be second-guessed once normality returns. Nevertheless, Governor Rhee Chang-yong is the man on the spot. He's also injected himself into a tussle in the legislature about the size of fiscal stimulus, an arena monetary chiefs usually avoid like the plague.