Gov't, central bank vow to work on taming inflation

(ATTN: ADDS BOK official's comments, other details in last 4 paras; INCLUDES photo)
SEOUL, July 25 (Yonhap) -- South Korea's finance ministry and the central bank will beef up their cooperation in bringing inflation under control amid growing concerns that price hikes could undercut the nation's overall economic recovery, a senior ministry official said Monday.
Vice Finance Minister Yim Jong-yong made the remarks during his meeting with Lee Ju-yeol, senior deputy governor at the Bank of Korea (BOK), in central Seoul to consult on macroeconomic policy directions. The meeting was the first of its kind since both sides agreed in June to hold a monthly policy consultation meeting.
"Inflation is a common issue confronting the whole world and it started from the supply side through such factors as oil price hikes and climate change, but now demand-side factors are also exerting pressure," Yim said in the meeting.
"Against this backdrop, the government will discuss (with the BOK) the latest inflation situations in major countries, their structural reasons and future outlooks," he added.



The meeting comes as policy coordination between the government and the central bank has been in high demand as South Korea's economy faces growing anxiety over persistently high inflation.
South Korea's consumer prices, a main gauge of inflation, jumped 4.4 percent last month from a year earlier, quickening from a 4.1 percent advance in May. Last month, the government raised its annual inflation target to 4 percent from 3 percent.
The government said earlier its top policy priority during the second half of this year is to tame surging inflation, stressing the need for cooperation with the central bank.
Yim said that the government and the BOK will work together to deepen bilateral understanding and expand information sharing with regard to their efforts to stabilize prices, while at the same time cooperate in drawing up countermeasures.
He also noted that both sides will work hard to enhance timeliness and efficiency in managing the nation's macroeconomic polices through the monthly consultation meeting with the central bank.
Lee echoed Yim's view, saying that it is "meaningful" to hold such a meeting with the government at a time when uncertainty in the global economy is growing.
"Many major countries are intensifying cooperation between central banks and governments in the wake of the global financial crisis," he said. "It is meaningful to have this macroeconomic policy consultation meeting when uncertainty is getting much higher."
After the meeting, the ministry and the central bank said in a press release that both sides shared the view that their policy priority should be placed on price stability. They also exchanged views on the latest external risks such as fiscal debt problems in Europe and economies in some advanced countries showing signs of losing steam.
Touching on fiscal woes in Greece, among other topics, the government and the central bank said that they agreed to monitor lingering external risks closely and vowed to keep exchanging information on the impact that they could have on the domestic economy.