BOK Deputy Governor: 'Inflationary Pressures Persist, High Likelihood of Additional Rate Hikes'

Bank of Korea Senior Deputy Governor Yoo Sang-dae has strongly hinted at the possibility of additional interest rate hikes just ten days ahead of his retirement.

During a press conference held today (the 11th), Deputy Governor Yoo stated, "Since we raised the rate last month, the pace and magnitude may be complex issues for the time being, but barring any special shocks or factors, the likelihood of additional hikes is high."

However, he explained that the timing and pace will be determined after reviewing upcoming economic indicators, as well as growth and inflation forecasts.

Regarding the scale of inflation, he noted that while it is smaller than immediately after the outbreak of the war in Ukraine during the previous rate-hike cycle, the upward trend is expected to persist for a long time.

Addressing criticisms that raising the base rate is premature given that recent economic growth is concentrated only in certain sectors such as semiconductors and artificial intelligence, he drew a line by saying, "The logic that we cannot raise rates simply because only one sector is growing is hard to accept."

He added, "We conduct monetary policy from the perspective that if the economy grows overall and inflationary pressures increase accordingly, we need to stabilize the economy beforehand."

Regarding the recent decline of the exchange rate to the early 1,400-won range, he remarked, "It gives the BOK a little leeway in making rate decisions, but it is not such a critical factor." He forecasted that "the influence of recent supply-and-demand factors is diminishing while mid-to-long-term factors, such as the interest rate differential between South Korea and the U.S. and the current account surplus, are growing stronger, so the exchange rate will stabilize downward in the mid-to-long term."

(Photo: Provided by Bank of Korea, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.