Bank of Korea Governor Rhee Chang-yong. Yonhap News

It has been suggested that the Bank of Korea should consider establishing regular and systematic communication channels with a diverse range of social stakeholders, similar to the U.S. Federal Reserve.

Kim Hyun-tae, a research fellow at the Korea Institute of Finance, made this proposal in a report on the 3rd, stating that it "would contribute to building a social consensus on the direction of monetary policy."

The U.S. Federal Reserve conducts a comprehensive review of its long-term monetary policy strategy every five years. During this process, it holds events called "Fed Listens" to gather and incorporate feedback from various segments of society.

Kim evaluated this practice as highly significant, noting that it not only demonstrates the Fed's commitment to continuously improving its monetary policy framework in response to changes in the economic structure but also enhances policy transparency and credibility by incorporating the voices of various economic agents.

Meanwhile, regarding the Fed's upcoming new framework, Kim predicted that "there is a possibility of modifying the flexible average inflation targeting framework adopted five years ago or returning to the previous price stability targeting regime."

This suggests that in the future, monetary tightening could begin immediately if inflation exceeds a certain threshold for a specific period.

The existing average inflation targeting framework refers to a policy that allows inflation to exceed the target level for a certain period if it has remained below the target for some time, aiming to converge the medium- to long-term average toward the target level.

Kim added, "There is a possibility that the Fed will formalize a priority on price stability when the goals of employment stability and price stability conflict," while noting that "the likelihood of changing the 2% inflation target is low."

Yonhap News