Heights of state chief executive seem to matter in Korean rate path

Heights of policymakers behind rate and states decisions may matter in South Korean rates running at their fastest pace to keep up with big strides in the U.S.

The so-called height chart, measuring the physical stature of the Federal Reserve chair, had been watched by some after the surprising coincidental parallel in U.S. rate movements over the last 40 years.

Paul Volcker, famous for yanking up the benchmark funds rate from an average 11.2 percent in 1979 to 20 percent by mid-1981, was 2 meter tall. Under average- or shorter-than average Alan Greenspan and Ben Bernanke and Janet Yellen the rate came down to near zero.

In came 182-centimeter lofty Jerome Powell tall who pushed the rate from 0.25-0.5 percent in March to 3.75-4 percent as of Wednesday after the fourth hike in 75 basis points in the November meeting.

The rates in Korea have also been rising at unprecedented pace after lift-off in August. The pace has accelerated since Bank of Governor Rhee Chang-yong, 190 centimeters tall, came to office in April. Under Rhee, Korean rates were hoisted up by the first-ever 50 basis points-twice in July and October to place the base rate at 3.0 percent.

Although correlation with central bank chief and rates do not match as closely as the U.S., it fits better with presidents in the Korean case.

Under Lee Myung-bak, 175 centimeters tall, Korea’s rate went up to 2.75 percent. During the four-year term of impeached president Park Geun-hye, 162 centimeters tall, the base rate averaged at 1.2 percent without a single raise. Under 172-centimeter Moon Jae-in’s term, the rate movement was most volatile, going down to an all-time low of 0.5 percent amid pandemic crisis and rising to 1.5 percent by the time he left office in April

After Yoon Suk-yeol inaugurated in May as the second-tallest Korean president at 178 centimeters, the rate has climbed at every monetary policy meeting and is set to go higher.

By Moon Jae-yong and Kyunghee Park