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Will BOK's forward guidance work?

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By Jeffrey I. Kim

All the businesspeople in the world pay a lot of attention to the statements made by two financial giants, U.S. Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell.

Yellen and Powell share the same objectives ― maximum employment, stable prices and moderate long-term interest rates. Their professional relationship is interesting. Secretary Yellen appointed by Democratic President Joe Biden is the predecessor of Fed Chairman Powell who was named by Republican former President Donald Trump.

Yellen wants to promote expansionary monetary policy for higher growth and more employment for the U.S. amid the coronavirus pandemic. By contrast, Powell wants to taper off quantitative easing in the hope of raising interest rates, as his main responsibility is to keep the U.S. dollar stable nationally and internationally.

Yellen and Powell are both pleased to witness that the U.S. real GDP has increased at an annual rate of 6.4 percent in the first quarter of 2021. The U.S. fiscal relief programs seem to have helped out the families who have suffered the most from the coronavirus pandemic.........

© The Korea Times

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