BOK Governor Backs Keeping Rate-Hike Stance to Curb Core Inflation
Summary
- Shin Hyun-song, governor of the Bank of Korea, said maintaining a rate-hike stance is the most reasonable way to contain rising core inflation.
- Shin said the timing of any increase and the degree of the response will depend on incoming data and economic conditions.
- Shin said short-term shocks lifted June inflation to 3.2%, while May core inflation rose to 2.5%, and demand-side price pressure is also continuing.
Forecast Trend Report by Period
Bank of Korea Governor Shin Hyun-song said maintaining a rate-hike stance is the most reasonable way to curb core inflation. He added that demand-side price pressure tied to the economic upswing remains in place.
Shin made the remarks on July 29 during a policy report to the National Assembly’s Planning and Finance Committee. He was responding to a question from Yoon Hu-duk of the Democratic Party about whether the central bank plans one or two additional benchmark rate increases this year.
"I think maintaining the rate-hike stance to contain core inflation is the most reasonable approach," Shin said. The timing of any increase and how aggressively the Bank of Korea responds will depend on incoming data and economic conditions, he said.
On prices, Shin said short-term shocks pushed June inflation to 3.2%. He said he places greater importance on core inflation, which rose to 2.5% in May.
"There is inflation through the cost channel, but demand-side pressure is also continuing as growth remains solid during the economic upswing," he said.
Han Kyung-woo, Hankyung.com reporter case@hankyung.com
Korea Economic Daily
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