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Inflation Targeting in Korea

In: Monetary Policy Implementation in East Asia

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  • Woosik Moon

    (Graduate School of International Studies, Seoul National University)

Abstract

The implementation of inflation targetingInflation Targeting (IT) in Korea highlights the importance of distinguishing between its symmetricSymmetric/Symmetry and asymmetricAsymmetric/Asymmetry operations. When Korea suffered from high inflation, the Bank of KoreaBank of Korea (BoK) set the inflation target at 3%, instead of 2%. Given its underlying intention to lower the inflation rateInflation rate to below 3%, rather than to maintain it centred at around 3%, its operation of inflation targeting was not necessarily a failure even when the inflation rate fell below 2%. In contrast, it would be a complete failure if the inflation rate rose above 4%. Clearly, this asymmetry cannot be applied to the operation of many advanced economies which, by adopting a target set at 2%, have endeavoured to insure that inflation is neither running persistently above nor below this target.

Suggested Citation

  • Woosik Moon, 2020. "Inflation Targeting in Korea," Financial and Monetary Policy Studies, in: Frank Rövekamp & Moritz Bälz & Hanns Günther Hilpert (ed.), Monetary Policy Implementation in East Asia, chapter 0, pages 31-42, Springer.
    • Handle: RePEc:spr:fimchp:978-3-030-50298-0_3
    DOI: 10.1007/978-3-030-50298-0_3
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