Incoming Bank of Korea Governor nominee Shin Hyun-song signaled a potential for tighter monetary policy. He stated the central bank must respond if supply-side shocks from ongoing geopolitical crises lead to prolonged inflationary pressure.
Shin emphasized that price pressures are expected to continue, especially if they persist and influence inflation expectations and core inflation. He believes monetary policy will play a role in such scenarios.
These comments emerge as South Korea faces weaker growth and higher prices, with global conflicts threatening larger supply shocks. The central bank recently held its benchmark interest rate steady at 2.50 per cent.
Prioritizing price stability for economic growth, Shin indicated inflation is likely to accelerate due to surging import costs. He also reversed a previous neutral stance on the currency, warning against a sharp weakening of the won and vowing intervention if exchange rate volatility becomes excessive.