Key facts
- Bank of Korea Governor Shin Hyun Song said monetary policy will remain restrictive.
- Inflation is expected to stay above the central bank's 2% target for some time.
- South Korea's annual consumer inflation rate was 2.9% in September.
- The benchmark interest rate is currently 3.00%.
The Bank of Korea will maintain a restrictive monetary policy stance as it seeks to tame persistent price pressures, with headline and core inflation expected to stay above target for "some time," the central bank's chief said on Tuesday.
Governor Shin Hyun Song attributed rising inflation to both cost-push factors, such as increased energy costs from the Middle East conflict, and demand-pull factors, including surging demand for artificial intelligence, where South Korea is a key player. He noted that the AI cycle's effect on inflation in South Korea "swamps the negative effect from the Middle East."