BOK chief signals hawkish stance amid outlook for higher growth, rates
Bank of Korea Gov. Shin Hyun-song signaled prolonged monetary tightening as strong AI exports lift growth and inflation risks persist.
Bank of Korea Gov. Shin Hyun-song answers lawmakers' questions during a parliamentary audit of the Ministry of Planning and Budget, the Bank of Korea and other agencies by the National Assembly's Finance, Economy, Planning and Budget Committee at the National Assembly in Yeouido, western Seoul, on Oct. 23.
NEWS1
Bank of Korea (BOK) Gov. Shin Hyun-song said Friday the central bank will adjust its monetary policy to a future environment of higher economic growth and interest rates, signaling it will maintain a hawkish stance for some time.
In response to a question from Rep. Kim Tae-nyeon of the ruling Democratic Party during a parliamentary audit at the National Assembly, Shin agreed with the assessment that a return to the era of ultralow interest rates would be difficult.
"We will implement policies effectively in preparation for the prospect of a future environment characterized by high growth and high interest rates," he said.
The central bank has adopted a more hawkish stance in recent months amid rising inflation and solid economic growth.
It raised the benchmark interest rate to 3 percent in July and August, marking the first back-to-back rate hikes since January 2023. The January 2023 hike was the seventh consecutive increase in a tightening cycle that began in April 2022.
Over the three-and-a-half-year period, the rate was gradually lowered to 2.5 percent from 3.5 percent before the latest round of hikes.
At its latest rate-setting meeting Thursday, the BOK held the rate steady but emphasized that the decision represented a pause in its tightening cycle rather than a shift away from its hawkish stance. It cited inflationary pressures from rising oil prices, renewed uncertainty in the Middle East and a stronger-than-expected economic recovery.
Shin also said the Korean economy is likely to grow by more than 3 percent this year and next year, driven by strong AI-related exports.
"I cannot say the exact numbers [for this year's growth forecast]," he said, noting that the Organization for Economic Co-operation and Development had revised its 2026 growth forecast for Korea to 3.7 percent.
The BOK raised its 2026 growth forecast to 3.3 percent from 2.6 percent in August and is expected to revise it upward again at its next meeting in November.
Yonhap
