The Governor of the Bank of Korea, Rhee Chang-Yong has said that the recent political issues in the country are not enough to drop interest rates. According to the governor, the move by the President of South Korea Yoon Suk Yeol has had no major impact on the country’s economy. In his interview with Bloomberg TV, Chang-Yong said that the move was premature, saying it was curbed before it became something serious.
He highlighted that people can view the economy from a strength and weakness standpoint and not necessarily through the political struggles. His comments in the interview came off the back of the parliament’s decision to reject the President’s martial law declaration. The President’s decision caused stocks and cryptos in the country to drop drastically, causing a liquidation frenzy in the financial market.
Bank of Korea governor plays down rate cut decision amid impeachment calls
The decision taken by South Korean President Yoon Suk Yeol to declare martial law was met with criticism from residents in the country. Political elites also saw it as a senseless move, with members from both Yoon’s party and his opposition seeing it as an overreach of his power. Now, opposition parties and some resident groups are gearing towards impeaching the president.
Analysts have also called Yoon’s move ‘classless’, noting that his actions caused geopolitical tensions which caused global trade uncertainties. However, the Bank of Korea governor is confident the economy can hold strong in the face of the storm. “Economic dynamics in Korea can be separated from the political dynamics, given our strong market fundamentals and the mature democracy,” Rhee said.
Governor Rhee explained that the economy relies on external factors, noting that trade uncertainties lie ahead with Trump’s victory at the polls. However, he is sure that the government officials in charge have what it takes to overcome the situation, even though he stressed that the path forward is murky. The Bank of Korea made a 3% point cut towards the end of November, signaling a second consecutive rate cut in back-to-back meetings.
According to Reuters, the board’s seven members voted to ease monetary policy, showing the central bank’s support for the economy in these trying periods. Rhee also said three board members were convinced about more rate cuts in the future with Trump’s return casting a gloomy shadow over the global market. He also discussed the export competition among countries, taking note of the trade environment after his victory.
South Korea moves the implementation of its crypto tax bill to 2027
Elsewhere, South Korea has agreed to kick the implementation of its crypto tax bill by two years, moving it to 2027. According to reports, individuals earning 2.5 million won from crypto will pay a 20% tax on their profits. Although it was billed to take effect in January, KDP Park Chan-dae, the Democratic floor leader, announced the new update.
The decision was taken after several arguments continued to trail the tax proposal made by the People’s Party of China and its government. The government urged a two-year delay while the PPP wanted three. In addition, Chan-dae noted that other bills were still up for debate at the chamber, naming about 13. Some of the bills include inheritance and gift taxes. He said if the government refuses to act, there is a possibility that the proposed tax will be reduced.