Key facts
- Bank of Korea Governor Shin Hyun-song pledged to adjust policy until inflation stabilizes towards the 2% target.
- Inflation is projected to remain above the 2% target through next year due to cost-push pressures from high oil prices and exchange rates.
- Consumer inflation in South Korea is expected to average around 3% in the second half of the year.
- France's economic growth forecast for 2024 was cut to 0.5% from 0.9%.
- An oil price shock is estimated to drag 0.2 to 0.3 percentage points off French growth.
- EU-harmonised inflation in France is forecast to accelerate from 2.4% to 3.0% by December.
The Bank of Korea is committed to fighting inflation, with Governor Shin Hyun-song vowing policy adjustments until price pressures stabilize towards the central bank's 2% target. Inflation is expected to remain above this target through next year, driven by cost-push factors like high oil prices and exchange rates, alongside demand-side pressures from wage increases. Consumer inflation is forecast to average around 3% in the second half of 2024. This outlook strengthens the case for potential monetary tightening at the Bank of Korea's next meeting on July 16. In parallel, France's economic growth forecast for 2024 has been revised downward to 0.5% from 0.9% by INSEE, citing a slow start and elevated energy prices. The statistics agency projects an oil price shock, stemming from the Iran war, could reduce French growth by 0.2 to 0.3 percentage points. While consumers face reduced spending power, French industrial sectors, particularly chemicals and refining, are expected to benefit from disruptions affecting Middle East competitors. Growth is anticipated to rebound to 0.3% in the second quarter before moderating later in the year, with EU-harmonised inflation projected to rise to 3.0% by December. The Bank of Japan recently increased its interest rates to a 31-year high.