Bank of Korea Governor nominee Shin Hyun-song speaks at a parliamentary hearing in Seoul.
Bank of Korea Governor nominee Shin Hyun-song has indicated a potential shift towards a hawkish monetary policy if persistent inflation arises from supply-side shocks related to the Iran war. Speaking at a parliamentary confirmation hearing in Seoul, Shin described the economic situation as a “significant test” for South Korea, which is already experiencing weaker growth and higher prices due to the Middle East conflict.
Shin warned that if the Middle East conflict is not resolved promptly, it could lead to a further rise in inflation. He emphasized that if inflation becomes persistent, influencing inflation expectations and core inflation, then monetary policy would undoubtedly need to play a role. The Bank of Korea had maintained its benchmark interest rate at 2.50% on April 10, in a decision made under the outgoing Governor Rhee Chang-yong.
Furthermore, Shin expressed concern over the “sharp weakening” of the Korean won and committed to intervening in the market if exchange rate volatility becomes excessive, marking a change from his previously neutral position on the currency.
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