South Korea should avoid following Japan ’s lead of using fiscal and monetary stimulus to combat the challenges of an ageing economy, the central bank chief said, urging reforms instead to boost fertility. Ageing is a rising concern in the developed world and South Korea is among the hardest-hit societies, together with Japan. South Korea shattered its own record for the world’s lowest fertility rate last year, adding to long-term pressure on policymakers to keep interest rates low and fiscal stimulus ample to boost growth. “It’s easier to say ‘let’s use the fiscal policy to stimulate the economy if growth is going down, let’s use the loose monetary policy to increase the inflation rate,” Bank of Korea Governor Rhee Chang-yong said in an interview. “It all failed.” South Korea should instead embark on long-delayed structural reforms, even though they may be painful, while increasing female labour participation, improving the education system and using foreign workers more effectively, the Bank of Korea governor said. “Many economists tried to solve these ageing problems of Japan using macro policy,” he said. “Macro policy is not designed to address this structural issue. So for Korea, I’d rather advise to my government that macro policy – fiscal and monetary – can be a sideshow.” Rhee said South Korea is already seeing a “real impact” from ageing and highlighted China and Thailand among other countries experiencing serious ageing in Asia. ‘Children aren’t a must’: population growing pains for China, South Korea The central bank chief has been vocal on issues overshadowing South Korea’s economy since taking office in April. Rhee said last week that the Bank of Korea would need “strong confidence” that inflation is converging to its medium target of 2 per cent before considering any policy easing.