speech commemorating the bank ’ s 72nd anniversary 10 june 2022 rhee, chang yong governor bank of korea dear fellow members of the bank of korea, today marks the 72nd anniversary of the bank of korea ’ s establishment. first of all, i wish to express my sincere gratitude to our predecessors who devoted themselves to the development of the bank of korea and have supported and encouraged the bank. i would also like to thank staff from all parts of the organization, from policy and management to field operations, for their hard work in their respective areas despite the difficult circumstances caused by covid - 19. let me also express my sincere appreciation to the families who have supported our staff so that they can faithfully fulfill their duties. looking back historically, the bank of korea has always since its foundation made every effort as a central bank, while responding to turbulent economic conditions. the bank of korea has faithfully carried out the role and functions that were required by the times. in the 1960s and 70s, our bank provided funds for achieving high - speed growth, and in the 80s and 90s, our bank devoted its attention to establishing a foundation for price stability. after the 2000s, it promoted financial stability and boosted economic vitality. and during the recent covid - 19 pandemic, our bank took unprecedented measures to mitigate the shock and pursued the preemptive normalization of monetary policy thereafter. i think that these efforts have provided one of the cornerstones for our economic development and stability. however, the bank of korea is currently facing another challenge. although the korean economy has been recovering thanks to the easing of pandemic restrictions and resumption of economic activities, external uncertainties surrounding the global economy are higher than ever. as global inflationary pressures are projected to remain high for a considerable time due to the prolonged war in ukraine, the original role of the central bank as an inflation fighter has made a resurgence. however, on the other hand, some have raised concerns that the global economy might go into a recession amid a slowdown of the chinese economy and accelerated interest rate hikes by major central banks. accordingly, the trade - off between inflation and growth is increasing, which is likely to put more pressure on the conduct of monetary policy. 1 / 6 under such policy conditions, our policy decisions and credibility could face a crucial test. it is true that we started monetary policy normalization earlier than other central banks last year, when consumer price inflation was recording around 2 to 3 percent. however

to focus on carrying out from the second half of this year. as inflationary pressures on the demand side are still not high, while the domestic economy is expected to continue its solid growth, we will need to maintain our accommodative monetary policy stance. in this process we will however have to consider the facts that the financial imbalances can grow, and, from a longer term perspective, that we need to increase our monetary policy operating capacity to respond to fluctuations in business cycles. from this standpoint, we will have to carefully judge whether it is necessary to adjust the accommodative monetary policy stance further, while closely checking future economic growth and inflation trends, changes in the monetary policies of major countries and the consequent financial stability conditions. in the second half of this year we will have to consider the inflation target to be applied from next year. the way in which the inflation target is set, and the method by which it is operated, have 1 / 3 bis central bankers'speeches direct effects on the central bank ’ s credibility and on whether economic actors ’ inflation expectations are securely anchored. we will have to closely analyze whether there have been any structural changes in the underlying price flows, and in the relationship between growth and prices, and properly set the inflation target and the period for re - examining it. we will also have to look whether there are any areas that need improvement in how we fulfill our responsibilities for explaining policy. we will need to strengthen our efforts aimed at enhancing the effectiveness of our policy communication. when uncertainties are high the markets can react sensitively to even small changes in economic conditions, or even to a single word from the policy authorities. it can thus be said that a meticulous communication strategy is demanded, to ensure that consistent communication concerning our policy directions can be achieved. we will also have to devote special attention to financial stability. financial and foreign exchange markets in some emerging markets with weak fundamental conditions have experienced unease recently. given korea ’ s favorable external soundness it is unlikely that the financial unrest in these countries will spread to affect us. but if overseas risks, from the monetary policy normalizations in major countries and strengthening protectionism for example, materialize simultaneously we will be unable to accurately estimate their effects. we will therefore have to watch even more carefully any changes in these risks. we can also not afford to be negligent in our research on and our responses related to new issues in economics. we will need to strengthen our