In surprise move, South Korea reappoints Lee as BOK chief for another term

By Cynthia Kim and Dahee Kim

SEOUL (Reuters) – South Korea has reappointed current central bank chief Lee Ju-yeol for another term on Friday, a move that reinforced plans to gradually tighten monetary policy and eased uncertainty about who would take the helm at the bank.

The government nominated Lee to serve another term from April 1 as his four-year term ends in March 31, a government spokesman said, a decision that surprised markets since a reappointment of a governor hasn’t been made since the 1970s.

“This is the most rational choice,” said Stephen Lee, an economist at Meritz Securities.

“Lee has been communicating well with the markets, and he is a true veteran of monetary policy. The bank’s policy plans will remain intact.”

His reappointment follows weeks of media speculation about which of a dozen possible contenders would be favored by Presiden Moon Jae-in.

The announcement on Friday quashed speculation that Moon might appoint a left-leaning scholar or an outsider who would be inclined to gradually tighten policies to cool household debt growth and a speculative frenzy in the property market.

The BOK raised the base rate by 25 basis points in November, its first tightening in six years.

Onshore financial markets were closed when the announcement was made.

“Lee is a real BOK veteran,” said a BOK insider.

“It’s a sign that Lee has been working well with the Moon government, and that the government will support the bank’s independence going forward.”

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