According to the Bank of Korea's data, the CPI

-BOK should use monetary policy to raise its key interest rate, not lower it -

According to the Bank of Korea's data, the CPI (Consumer Price Index) in March 2024 is still high, "+0.1 percent" compared to the previous month and "+3.1 percent" compared to the same month last year.

In other words, the high price phenomenon continues.

In addition, the producer price index (PPI) in March 2024 is "+0.2%" compared to the previous month and "+1.6%" compared to the same month last year.

This increasing trend in PPI plays a role in pushing up CPI in the next two to three months, so the Bank of Korea's CPI is bound to rise in the future.

In addition, the main currency volume in February 2024 was "3,937 trillion won", "+0.1%" compared to the previous month, and "+3.4%" compared to the same month last year.

In other words, the Bank of Korea continues to print huge amounts of money.

Therefore, if we analyze the current Korean economy, the value of the won continues to decline as the M2 (the amount of original currency) increases by issuing government bonds, etc.

And this decline in the value of the won raises the import price index, raises the PPI, raises the CPI, and continues to lead to high prices.

Another reason for the won's depreciation is that it continues to maintain a low key interest rate of 3.5% compared to the Fed (5.5 percent) and the European Central Bank (4.5 percent).

Interest rates reflect the value of money.

In other words, high interest rates increase the value of money, and low interest rates decrease the value of money.

Low interest rates, or monetary easing, reduce the value of money.

Therefore, the current decline in the value of the Korean won is due to the Bank of Korea's continued increase in the main currency volume and the Bank of Korea's low base interest rate.

Additionally, negative messages about the Fed's base rate cut and geopolitical risks in the Middle East are added to this, forcing the won to fall further and high prices to continue.

However, the Bank of Korea's recent mood is that if the European Central Bank (ECB) cuts its benchmark interest rate, the Bank of Korea can also cut its benchmark interest rate.

If the Bank of Korea makes such a policy decision, the value of the won will fall further and prices will inevitably rise further.

Therefore, I believe that the Bank of Korea should raise the benchmark interest rate, not lower it.

In this way, I think we need to catch high prices and increase the value of the won.

In other words, it is impossible to revive the Korean economy with the economic theory and the hands-on skills of the members of the Monetary Policy Committee.

In other words, I think we should not just follow the monetary policy of the Fed or the ECB, but have flexibility and dress our economy.

And it should be kept in mind that the Korean won is neither a key currency nor a quasi-key currency.

Therefore, I believe that the current instability in the Korean economy is due to the failure of the Ministry of Economy and Finance's fiscal policy and the Bank of Korea's monetary policy.

Here is a look at the monetary policy of Indonesia, a rising Southeast Asian economic powerhouse.

Indonesia's central bank maintained a "6.0%" base rate from October 19, 2023, to April 23, 2024.

However, after recent U.S. Fed and Middle East geopolitical risks caused the rupiah to fall to "16,337 rupiah" per dollar, it rather raised the benchmark interest rate by 0.25% on April 24, 2024, remaining "6.25%" (see attached Indonesian central bank base rate history).

With the Indonesian central bank's flexible monetary policy, the rupiah per dollar is increasingly strong at "16,240 rupiah."

Indonesia's central bank also says it will keep such monetary policy until the end of 2024

It is important to keep in mind that there is no painless treatment.