hikes by the us federal reserve and the uk ‘ s brexit from the eu could cause international financial market unrest, and a delay in the world economic recovery. domestically, it is hard to rule out the possibility of the lingering political uncertainties having adverse effects not only on the consumption and investment sentiments of economic agents, but on the views of foreign investors concerning our economy as well. - 2 - at a time like this, keeping the foreign exchange market and the real economy stable is of primary importance. given the korean economy ’ s robust external soundness and financial resilience as well as its adequate policy space, it should be able to withstand shocks of some extent. we cannot just sit back complacently, however. if multiple external risks should materialize all at once, or in concert with a deterioration in domestic conditions, the repercussions can be greater than expected. we should therefore devote every effort to comprehensive risk management, so that we can deal in a timely manner with any such situation that may arise. we also need to push consistently ahead with reforms to counteract structural problems such as our low birth rate and population aging, the accumulation of household debt, labor market segmentation, and income inequality. if we leave our economy ’ s structural vulnerabilities unresolved, citing the unfavorable conditions currently before us, then the recovery of our growth potential will become even more difficult to attain. dear members of the bank of korea, i would like to touch now on the major tasks that we will need to focus on this year. we will conduct our monetary policy so as to ensure that the recovery of economic growth continues, and that consumer price inflation approaches the target level over a medium - term horizon. although the pace of inflation will gradually pick up, owing to the rising oil prices, it is forecast that the upward pressures from the demand side will not be great since economic growth is expected to - 3 - be only modest. going forward, maintenance of our current accommodative monetary policy stance for a considerable time will thus be appropriate. we also need to operate the bank intermediated lending support facility economic in the direction of improving growth. the financial support for its support smes for suffering temporary financing problems, and for those that contribute to increasing employment, needs to be expanded. given the considerably changed financial and economic conditions, we will also have to examine the need for reforming our lending facilities over a medium - to long - term horizon.

fell, there were probably not many people who believed that sweden would change its monetary policy regime entirely. most people probably expected that we would eventually return to a fixed exchange rate. however, it was clear that such a return would take time and during a transition period a new strategy would be necessary. at the end of the 1980s, the reserve bank of new zealand had begun to aim its monetary policy at trying to directly govern inflation and in 1990 they introduced an official inflation target as a means of creating a nominal anchor in the economy. canada and the united kingdom soon followed suit and sweden joined the group in 1993. on 15 january, the riksbank announced that its monetary policy objective would be to hold inflation around a quantified target : 2 per cent, measured as the change in the consumer price index. this target would begin to apply from 1995. twenty years have now passed. with hindsight, we know that it actually took a very short time for the inflation target to become credible and for inflation expectations to become anchored around 2 per cent. but in the beginning, it was not entirely clear that the inflation target would be a success. monetary policy was therefore mainly focused on creating confidence in the target initially. the repo rate was kept at a high level to bring down inflation, despite relatively high unemployment, which led to criticism from several areas. 3 as inflation expectations became anchored, however, there was scope to include developments in the real economy in monetary policy. one could deliberately allow inflation to deviate from the target for a period of time if this would give a better long - run development in employment and unemployment. the inflation - targeting policy was thus flexible. the framework for the inflation - targeting policy has of course developed considerably over the past twenty years, much due to academic research. research has also contributed insights into the economic policy problems faced by sweden and several other countries in the 1970s and 1980s. it was difficult for decision - makers to inspire confidence in the long - run aim to hold inflation low, as participants in the economy understood that there were incentives to deviate from the target in the short run, for example, to reduce unemployment. it could therefore be beneficial if monetary policy were conducted with a focus on a clearlyformulated, long - run target for price stability and an arm ’ s length away from the current party politics. this was the starting point for the reforms implemented in many countries during the 1990s and which meant that monetary policy, in slightly different ways and to varying degrees