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Author: Kevin Clinton Publisher: International Monetary Fund ISBN: 1498315399 Category : Business & Economics Languages : en Pages : 28
Book Description
Adoption of inflation targeting by the Bank of Korea (BOK) in 1998 contributed to low and stable inflation. However, after the global financial crisis (GFC) monetary policy faced more challenging conditions. Inflation slipped below the target range in 2012 and remains below it despite a cut in the target to 2 percent in 2016. Policy also became more complex with the addition of financial stability to the central bank’s mandate. To address these challenges, this paper proposes a two-pronged approach to strengthen the effectiveness with which monetary policy can meet its objectives: first, enhanced communication on how the target will be achieved over the medium-term, building on a forecasting and policy analysis system; and, second, by clarifying the complementary role of macroprudential policy in containing financial stability risks so that monetary policy can focus on the inflation target. Simulation of a macro model calibrated to Korea illustrates how it can be used to provide this greater medium-term focus on achieving the inflation target and strengthen communication.
Author: Kevin Clinton Publisher: International Monetary Fund ISBN: 1498315399 Category : Business & Economics Languages : en Pages : 28
Book Description
Adoption of inflation targeting by the Bank of Korea (BOK) in 1998 contributed to low and stable inflation. However, after the global financial crisis (GFC) monetary policy faced more challenging conditions. Inflation slipped below the target range in 2012 and remains below it despite a cut in the target to 2 percent in 2016. Policy also became more complex with the addition of financial stability to the central bank’s mandate. To address these challenges, this paper proposes a two-pronged approach to strengthen the effectiveness with which monetary policy can meet its objectives: first, enhanced communication on how the target will be achieved over the medium-term, building on a forecasting and policy analysis system; and, second, by clarifying the complementary role of macroprudential policy in containing financial stability risks so that monetary policy can focus on the inflation target. Simulation of a macro model calibrated to Korea illustrates how it can be used to provide this greater medium-term focus on achieving the inflation target and strengthen communication.
Author: Publisher: ISBN: Category : Languages : en Pages : 28
Book Description
Adoption of inflation targeting by the Bank of Korea (BOK) in 1998 contributed to low and stable inflation. However, after the global financial crisis (GFC) monetary policy faced more challenging conditions. Inflation slipped below the target range in 2012 and remains below it despite a cut in the target to 2 percent in 2016. Policy also became more complex with the addition of financial stability to the central bank’s mandate. To address these challenges, this paper proposes a two-pronged approach to strengthen the effectiveness with which monetary policy can meet its objectives: first, enhanced communication on how the target will be achieved over the medium-term, building on a forecasting and policy analysis system; and, second, by clarifying the complementary role of macroprudential policy in containing financial stability risks so that monetary policy can focus in the inflation target. Simulation of a macro model calibrated to Korea illustrates how it can be used to provide this greater medium-term focus on achieving the inflation target and strengthen communication.
Author: International Monetary Fund. Asia and Pacific Dept Publisher: International Monetary Fund ISBN: 148434166X Category : Business & Economics Languages : en Pages : 118
Book Description
This Selected Issues chapter outlines a strategy to facilitate this and navigate the more challenging monetary environment, involving enhanced communication of policy interest rate intentions and inflation-forecast targeting. The reduction in the inflation target by a percentage point to 2 percent in January 2016 weakened the nominal anchor. Monetary policy can play a role rebuilding the credibility of the anchor more rapidly through the adoption of inflation-forecast targeting. This strengthening of the monetary policy framework involves enhancing communications. An effective, credible monetary policy cannot address all macroeconomic challenges facing Korea. Rather, it can foster robust growth with low inflation, providing a stable and predictable environment that allows other policies to work more effectively. These other policies play a complementary role. Fiscal policy can reinforce the effectiveness of monetary policy, as illustrated by model scenarios. Structural policies can also support monetary policy by, for example, boosting potential growth.
Author: Alexander W. Hoffmaister Publisher: International Monetary Fund ISBN: Category : Business & Economics Languages : en Pages : 62
Book Description
The revised Bank of Korea Act has recently come into effect making it clear that price stability the primary goal of monetary policy in Korea. Since April 1, 1998 the Bank of Korea (BOK) is no longer to pursue the dual objectives of the maintenance of the stability of the value of money and strengthening of the soundness of the banking system and is now entrusted with the primary goal of price stability. Each year the BOK is to set a "price stability" target in consultation with the government and to elaborate a monetary plan to achieve this target. The BOK is required to publicly announce the monetary plan, publish the minutes of the monetary policy board meetings, and prepare a detailed report on monetary policy to be submitted to the National Assembly at least once a year.
Author: International Monetary Fund. Monetary and Capital Markets Department Publisher: ISBN: 9781513557014 Category : Languages : en Pages : 67
Book Description
Past experience with financial crises places systemic risk oversight at the core of Korea's approach to the financial system. The Korean authorities have amassed over a decade of experience with macroprudential policies. They have put in place rigorous and sophisticated processes for risk monitoring. They publish first-rate analysis. And they have actively developed measures to mitigate risks to the financial system--notably from FX exposures, and from household indebtedness--as circumstances have changed. But their system has evolved to be highly complex, which poses challenges for coordination, communication, and transparency; moreover, their toolkit needs to be extended. These areas should be the focus of efforts to strengthen the policy framework.
Author: Mr.Angel J. Ubide Publisher: International Monetary Fund ISBN: 1451844646 Category : Business & Economics Languages : en Pages : 67
Book Description
After years of strong performance, Korea’s economy entered a crisis in 1997, owing largely to structural problems in its financial and corporate sectors. These problems emerged in the second half of that year, when the capital inflows that had helped finance Korea’s growth were reversed, as foreign investors—reeling from losses in other Southeast Asian economies—decided to reduce their exposure to Korea. This paper focuses on the sources of the crisis that originated in the financial sector, the measures taken to deal with it, and the evolution of key banking and financial variables in its aftermath.
Author: Gongpil Choi Publisher: ISBN: Category : Languages : en Pages : 44
Book Description
[Enter Abstract Body]A rapid macroeconomic turnaround and lingering financial market uncertainties in Korea are seen as conflicting but consistent indicators of the fundamental weakness in financial markets. Drastic changes in firms' financing strategy, volatile capital movements, and loose financial supervision also reflect problems of applying macro measures when market functions are not fully normalized. Given the increasing importance of robust financial sector and the limited role of banking sector in maturity transformation, the missing link for economic efficiency and financial stability is seen as the absence of long-term capital market. Heavier reliance on poorly supervised capital markets in the wake of crisis accentuated business cycle and led to complacency that thwarted institutional reform. Future macro policy needs to be pursued with special considerations for promoting deeper and broader financial markets. Poor risk evaluations and currency and maturity mismatch problems need to be resolved by strengthening market mechanism. And a form of flexible inflation targeting is seen as a proper choice for coordinating conflicting objectives within a time consistent framework for securing suitable environment for financial market development.
Author: International Monetary Fund Publisher: ISBN: 9781462328437 Category : Languages : en Pages : 38
Book Description
The recent global financial crisis has exposed the limitations of a conventional inflation targeting framework in insulating an economy from all shocks, and demonstrated that its rigid application may aggravate the effect of shocks on output and inflation. Possible refinements to the inflation targeting framework in Korea were investigated by taking into account developments in the financial sector. The findings indicate that incorporating financial stability considerations will ease business cycle fluctuations by mitigating the buildup of factors that lead to large fluctuations in output and inflation.
Author: Kevin Clinton
Author: Kevin Clinton
Author: 
Author: International Monetary Fund. Asia and Pacific Dept
Author: Alexander W. Hoffmaister
Author: Michael Patrick Dooley
Author: International Monetary Fund. Monetary and Capital Markets Department
Author: Mr.Angel J. Ubide
Author: Gongpil Choi
Author: International Monetary Fund
Author: Otaviano Canuto