Washington: Bank of Korea Governor Rhee Chang-yong emphasized the effectiveness of inflation targeting as a mechanism to mitigate political influence during an open discussion with Kristalina Georgieva, the managing director of the International Monetary Fund. Rhee's remarks were made against the backdrop of the U.S. Federal Reserve facing pressure from President Donald Trump to decrease the key lending rate in an effort to stimulate economic growth.

According to Yonhap News Agency, Rhee highlighted the merits of inflation targeting, a monetary policy strategy where a central bank sets a public numerical target for the inflation rate and utilizes available policy tools to meet this target. He stated, "I believe, in fact, inflation targeting is a good framework for many countries... Inflation targeting is a good tool for me to shrug off many political pressures."

Rhee elaborated that this approach allows central banks to maintain a focus on long-term objectives, noting, "And then whenever there's a request for me to do something, I can always say this is not my mandate so that the central bank can have a more longer-term perspective. So in some sense, globally, I think inflation targeting is a good framework."

His comments followed the Federal Reserve's decision to lower its key lending rate by a quarter percentage point, marking the first reduction of the year amid the second Trump administration. This decision came after President Trump applied pressure on Fed Chair Jerome Powell to reduce the rate, sparking concerns regarding the central bank's independence.

Rhee also acknowledged the Fed's commitment to achieving a 2 percent inflation rate and expressed satisfaction that Korea's inflation is consistent with this target, stating, "So my mandate is okay."