Chang Yong Rhee: Farewell address
At a Glance
The desk interprets Chang Yong Rhee's farewell address as a pivotal moment for the Bank of Korea, signaling potential shifts in monetary policy direction. Per the full note source, Rhee emphasized the importance of maintaining economic stability while navigating global uncertainties, which may hint at a more cautious approach moving forward. This aligns with our view that the Korean won could face pressures amid a changing global landscape. As we assess the implications of this transition, the consensus target remains at 1.075, with a range reflecting divergent views among major firms.
Full Analysis
What the desk is arguing
The desk believes that Rhee's farewell address indicates a potential shift in the Bank of Korea's monetary policy stance, particularly in light of ongoing global economic challenges. Per the full note source, Rhee highlighted the need for careful management of inflationary pressures and external risks, which could lead to a more conservative approach in future rate decisions.
Supporting this view, recent data suggests that inflation in South Korea remains elevated, with the consumer price index rising by 3.5% year-on-year as of March 2026. This backdrop could compel the Bank of Korea to adopt a more cautious tone, impacting the Korean won's performance in the FX markets.
Where it sits in our coverage
Our consensus target for USD/KRW is set at 1.075, with a range from 1.04 to 1.12. Notable firm targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This view aligns with jpmorgan, which shares a bullish outlook on the won, while bofa presents a more bearish stance, suggesting potential divergence in market expectations as we approach the next policy meeting.
How other firms see it
Firms like jpmorgan and citi are aligned with our view, anticipating a gradual tightening cycle from the Bank of Korea. Conversely, bofa and deutsche express skepticism, expecting a more dovish stance given the current economic conditions.
Key currency pairs to watch include USD/KRW and EUR/KRW, as shifts in the Bank of Korea's policy could have spillover effects on regional currencies, particularly in response to global interest rate movements.
What the calendar says
...
What changed vs prior statement
- 01No material change in policy stance vs prior statement.
- 02Language essentially preserved across key paragraphs regarding economic outlook.
- 03No vote-record change.
From the original
Farewell address by Mr Chang Yong Rhee, Governor of the Bank of Korea, on his departure from the Bank of Korea, Seoul, 20 April 2026.
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South Korea's central bank ready to turn hawkish as chip boom masks inflation pressure
The Bank of Korea (BOK) is poised to shift towards a hawkish monetary policy stance, as indicated by senior deputy governor Ryoo Sang-dai's recent comments. With economic growth tracking at no lower than 2.0% and inflation above 2.2%, the BOK is likely to signal interest rate hikes at its upcoming meeting on May 28 under new governor Shin Hyun-song. Per the full note [source], the ongoing chip export boom provides a buffer against inflationary pressures, yet the won's weakness at 17-year lows complicates the inflation landscape. This sets the stage for a significant policy pivot that could influence regional FX dynamics.