Key facts
- Bank of Korea Governor Shin Hyun-song believes a rate hike is necessary at an appropriate time.
- Inflation remaining above the target is a key consideration for the central bank.
- Financial stability risks are also being monitored.
- The South Korean economy is projected to maintain solid growth.
- Growth is expected to be supported by the semiconductor industry cycle and reduced Middle East tensions.
Bank of Korea Governor Shin Hyun-song indicated on Thursday that a rate hike is needed at an appropriate time, as the central bank weighs factors such as inflation remaining above its target and other financial stability risks. Shin made the remarks during a session at the National Assembly, where he also shared his outlook for the South Korean economy to maintain solid growth. This growth is anticipated to be bolstered by the semiconductor industry cycle and a reduction in geopolitical tensions in the Middle East. He stated that inflation is expected to persist at elevated levels for a considerable period, even with eased Middle East-related factors, due to the ongoing impact of previous cost increases. The BOK is working on policy recommendations from a neutral, long-term perspective, addressing structural issues like low birth rates, aging demographics, balanced regional growth, and climate change.