South Korean President Park Geun-hye nominated Lee Ju-yeol as the next Bank of Korea (BOK) governor, drawing on a central bank veteran to help steer Asia’s fourth-biggest economy.
Lee, 61, a former deputy governor of the bank with more than 30 years experience, would replace Kim Choong-soo, whose four-year term ends on March 31, according to Yoo Myung-hee, a presidential office spokeswoman.
While Lee will face the first South Korean parliamentary vetting of a nominee for governor in the central bank’s 64-year history, the legislature does not have the power to veto Park’s choice.
The new governor faces pressure to delay any interest-rate increase after an adviser to the president said on Thursday last week that the economy needs support because of weakness in consumption. He will also be scrutinized over whether he expands on Kim’s efforts to promote diversity at the central bank, which gained its first female deputy governor in July last year.
“Lee Ju-yeol has been neutral when it comes to monetary policies, and is quite balanced,” Hong Kong-based Nomura Holdings Inc economist Kwon Young-sun said. “It’s important for the central bank to have someone like Lee. It’s a good decision.”
The bank is likely to remain “neutral or dovish” in monetary policy given the make-up of the rest of the seven-person policy board, Hong Kong-based HSBC Holdings PLC economist Ronald Man (文略韜) said.
Potential issues for an incoming governor include how to respond if additional easing by the Bank of Japan pushes the yen even lower, putting pressure on South Korean exporters, Man said.
Lee, currently a professor at Yonsei University in Seoul, started at the bank in 1977, and worked in the research, foreign exchange and monetary policy divisions before rising to the senior deputy governor in April 2009, his resume distributed by the bank yesterday showed.
A graduate of Yonsei University, Lee received a master’s degree in economics from Pennsylvania State University in 1988.
“Lee is a BOK man, period. He is a quiet man, and an academic dynamo,” said Kim Hyeon-wook, a Seoul-based economist at SK Research Institute and a former BOK economist, who worked with Lee during the 2008 global financial crisis.
Lee will have to deal with challenges from the US Federal Reserve’s stimulus tapering that could increase volatility in capital flows to record household debt that is weighing on domestic demand.
Inflation accelerated to 1.1 percent in January from 0.9 percent in October last year — the lowest since 1999 — and will pick up to the central bank’s target range of 2.5 percent to 3.5 percent in the second half of this year, the economist said in January.