Bank of Korea’s Outgoing Governor Flags Limits to Policy Tools

South Korea’s outgoing central bank governor said monetary and fiscal policy are becoming less sufficient as primary tools for steering the economy, urging structural reforms as he steps down after a four-year term in which he dealt with repeated systemic shocks.

“It is becoming increasingly difficult to achieve economic stability and growth through monetary and fiscal policy alone,” Rhee Chang Yong said in his farewell address Monday. “Despite the gradual weakening of the effectiveness of monetary and fiscal policy amid changes in the economic structure, public expectations for the role of policymakers remain elevated, shaped by past successes, widening the gap between the two.”