seong - tae lee : monetary policy in an environment of low inflation opening address by mr seong - tae lee, governor and chairman of the bank of korea, at the bank of korea international conference 2006, seoul, 16 june 2006. * * * greetings ladies and gentlemen, i am delighted to be here to express my warm welcome to all of you attending " the bank of korea international conference 2006 ". i would like to extend particular gratitude to our keynote speaker, professor frederic mishkin of columbia university ; to our luncheon speaker, president un - chan jung of seoul national university ; to president william poole of the federal reserve bank of st. louis ; and to our other chairpersons, speakers and discussants, for taking time out from their busy schedules to be with us today. this year's conference, marking the 56th anniversary of the bank of korea's establishment, deals with the theme of " monetary policy in an environment of low inflation ". many central banks including the bank of korea are currently facing difficulties conducting monetary policy in the new environment characterized by low inflation. in this regard, i believe that today's conference is very meaningful and most timely. conducting monetary policy under low inflation as we are all aware, inflation throughout the world has declined since the mid - 1990s. this is mainly attributable to the emergence on the global stage of vast low - wage economies such as china and india ; to productivity gains made possible by information technology ( it ) development ; and to intensified competition in both domestic and global markets. in addition to all of these factors, the increased credibility of central banks is also believed to have contributed to low inflation. over the years, central banks around the world have been resolute in their pursuit of price stability, while working hard to enhance their capabilities in the conduct of monetary policy. together with the continuing price stability, this has helped lower the inflation expectations of economic agents. the case is much the same in korea. both consumer price and core inflation rates are running at levels some two percentage points lower than those we saw here prior to the currency crisis. particularly, the rate of core inflation nowadays is moving substantially below the lower bound of the bank of korea's target range. in the last few months, upward price movements have been observed in several countries. however, rising prices on a scale similar to those of the past are no longer expected to reappear for the time being, as firms continue their efforts to improve productivity with

##tated. the greatest assets of the central bank are its human resources. while strengthening staff competencies and international networks through the continued propulsion of secondments to foreign central banks and staff entry to international organizations, we intend to take to a further stage the “ global initiative program ” that started early this year. we will have to continually provide our staff of all ranks with wide - ranging training opportunities to build individual capacities. we must be resolute in our will to heighten still further the profile of the central bank in contributing to the national economy, all the more so in these times of change we now find ourselves in. internal reform is a task that cannot be hesitated over for even one moment in our quest to grow as a central bank with prestige and strong public credibility. we must ensure that the bank of korea is appreciated by the entire nation for the worth of its whole range of activities and organization, by contributing substantially to the development of regional communities through the operations of our regional branches, and aim to improve our organizational management, for example, by strengthening the functions of our overseas representative offices. my dear friends and colleagues of the bank of korea, we should not forget that, as the interest and anticipations of society in regard to the central bank are heightened, our duties become much greater. pushing the bounds of our capacities forever outward, we need to be conscious of our lofty mission and adopt an attitude of strict self - discipline. as i draw toward the end of my anniversary address today, i would once more like to emphasize that in order to play our part with excellence as a central bank and efficiently conduct policies in today ’ s global era, the bounds of our consciousness and our spheres of activities should no longer be restricted to korea alone but must extend to the world, and our ways of thinking and acting are necessarily inseparable from those of our society. i look forward to great efforts from each and every member of the bank in embarking on the drive to create a “ global bok ”, and i offer you my heartfelt encouragement. when we gather here in a year ’ s time to celebrate the 62nd anniversary of the bank ’ s foundation, may it be with a consciousness of dedication to being in the fore in developing the organization, so that we may take pride in having advanced the position of the bank of korea a stage further. on this occasion of the 61st anniversary, i thank you all again very sincerely for your endeavors, and i wish the best of health and