BOK Governor Says Case for Rate Hike Is Clear on Inflation, Growth, FX, Housing

Bank of Korea Governor Shin Hyun-song made clear that the central bank sees a need to raise its benchmark interest rate. Inflation, growth, the exchange rate and housing trends all point in the same direction for monetary policy, he said.

Shin spoke at a press briefing on May 28 after the Monetary Policy Board held the benchmark rate at 2.50%. "Whether you look at inflation, growth, the exchange rate or housing, the path ahead is clear," he said.

"Going forward, we will manage these factors consistently by raising the benchmark rate," he added. While the board left the policy rate unchanged that day, it also openly signaled that the future policy stance is tilted toward tightening.

Shin said uncertainty surrounding the policy decision was relatively limited this time. "When making policy, there can be a dilemma when objectives conflict and it is unclear which way to go, but this time is an exceptional situation," he said.

Earlier on May 28, the Monetary Policy Board said in its statement that it would determine the timing of any rate increase after assessing the extent of inflation pressures, the economic recovery trend and financial stability conditions.

Oh Se-seong, Hankyung.com reporter, sesung@hankyung.com