President Obama meets with Fed Chairwoman Yellen

People often say that Federal Reserve chair is the second biggest influential figure in the U.S. The global financial market fluctuates violently when the Fed raises interest rates. Of course the most influential person in the U.S. is the president. President Barack Obama and Fed Chairwoman Janet Yellen met Tuesday at the White House. The two people had met back in 2014 when Yellen became Fed chairman. In Korea there has been no incident of the president meeting central bank governor in private. Thus from the perspective of Korean people, it is very unfamiliar that President Obama had a meeting with Fed Chairwoman Yellen.

It is no exaggeration to say that the global economy hinges on whether the Fed continues to hike rates. The meeting between these two figures came right before the U.S. Federal Open Market Committee meeting due April 26 and 27, raising speculation that they could have talked about the rate issue. However, White House spokesman Josh Earnest said rate talks would infringe on the Fed chairwoman's independent monetary authority, adding that he expects no such talks even though it was a closed meeting.

Had Korean President Park Geun-hye and Bank of Korea Governor Lee Ju-yeol met privately in sensitive situations, there would have been harsh criticism claiming it would infringe on the central bank's independence. U.S media seems to be insensitive to the private meeting, however, as they only said the two discussed about the U.S. economy's mid- to long-term economic prospects and potential threats to the global economy. This implies that while the U.S. people have firm belief that the Fed's independence will not be threatened, Koreans don't have enough confidence on the Bank of Korea.

The U.S. Fed and the Bank of Korea are different in how the law in two countries describe of their goals. Under U.S. law, the Fed has two different goals of promoting maximum employment and stabilizing prices. Under the Korean law, the Bank of Korea's utmost goal is to stabilize prices. The Bank of Korea's goal has narrowed at the end of 1997 when Korea was placed under the bailout by the International Monetary Fund. The Bank of Korea does pay attention on other issues such as employment, but the law has to specify the central bank's goal, which would then reduce its conflict with the government and raise its independence. Only then the president and the central bank governor will be able to meet in private and have candid talks.