The primary objective of a central bank is, without question, "price stability." So when the food prices that hit our daily lives hardest skyrocket, is the central bank’s stance—claiming, "Because this is due to extreme weather or foreign raw material costs, we will focus on core inflation which we can control through interest rates"—a form of dodging responsibility and dereliction of duty? Hiding behind macroeconomic indicators while people’s livelihoods are threatened naturally sparks deeply justified anger and skepticism. Yet behind this painful irony lie the critical limitations of central banks as institutions and the secrets of how the macroeconomic system functions.
You Can’t Perform Precision Surgery with a Giant Hammer
The biggest reason central banks cannot directly manage food prices is that their only weapon is a single, blunt hammer: the base interest rate.
Interest rates are an indiscriminate tool that either tightens or loosens the flow of money across the entire economy. If cabbage or apple prices surge due to torrential rain and crop diseases, what would happen if the central bank aggressively hiked interest rates to bring them down? Cabbage prices would remain untouched, while self-employed business owners, vulnerable borrowers, and enterprises barely holding on by loans would be pushed off the edge of financial ruin first. There is a practical limitation: central banks exist to safeguard the overall value of money, not as administrative agencies capable of controlling the supply of specific goods or reforming distribution channels.
Beyond Dereliction of Duty: The Politics of Reports and Warnings
Should central banks simply stand by and watch? Not at all. Recently, central banks in major economies have gone beyond merely acknowledging that "we cannot directly fix this with interest rates." They are leveraging their influence to speak up actively on spilover inflation and living costs.
Central banks, including the Bank of Korea, continuously publish in-depth reports analyzing the impact of surging agricultural prices (agflation) and climate change on inflation. Rather than just announcing metrics, they issue strong policy recommendations and warnings to the government and market, asserting that "we must reform the irrational domestic distribution structures for agricultural goods" and "we must diversify import channels and manage household debt risks." They compensate for their inability to act directly through professional analysis and warning reports.
A Division of Labor: The Central Bank’s Blaze, the Government’s Water Gun
Ultimately, a nation’s price stability system relies on two interlocking gears working in tandem.
The central bank’s role is to extinguish the "raging blaze" spreading across the broader economy—the total money supply and core inflation—using the heavy-duty retardant of interest rates. Meanwhile, the government (such as the Ministry of Economy and Finance or the Ministry of Agriculture, Food and Rural Affairs) deploys microeconomic policies to tackle "individual fires" like food prices by applying tariff quotas to boost imports, releasing reserve stocks, or cracking down on unfair distribution practices. If the central bank tried to intervene in the price of individual items, it would risk clashing with government industrial policies, losing policy neutrality, and plunging the whole economy into greater chaos.
A Sober Acknowledgment of Limits Brings Greater Responsibility
A central bank keeping its eye on core inflation is not a dereliction of duty that turns a blind eye to people’s suffering. Rather, it represents a "sober restraint" aimed at knowing the precise effective range of its tools to prevent their misuse.
However, hiding behind statistical numbers when the dinner tables of everyday people are threatened is an attitude to guard against. While handling the indiscriminate tool of interest rates with utmost care, central banks must continuously push the government through deep-dive reports and structural reform proposals to ensure microeconomic policies are properly executed. Listening to the screams at the dinner table without losing balance across the entire economy—that is the true responsibility a central bank must bear.
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