Bank of Korea Governor Shin Hyun-sung stated on May 28 that raising the benchmark interest rate in the future would provide an opportunity to manage various economic factors consistently.
During a press conference following the monetary policy committee's decision to maintain the interest rate at 2.50%, Governor Shin noted, "Inflation has directly impacted consumer prices, and growth showed positive numbers in the first quarter. The exchange rate is leaning towards weakness, and issues related to real estate and household debt are resurfacing."
He added, "The core inflation rate was 2.2% in April, but other indicators suggest that inflationary pressures are clearly present. The living cost index has the most direct impact on expected inflation, and considering the current economic situation and price trends, I believe there are ongoing upward pressures on prices."
Governor Shin explained, "The most challenging aspect of policy implementation is that there are multiple objectives that can conflict, creating a dilemma. However, in this case, when looking at inflation, growth, exchange rates, and real estate, the path forward is clear. Raising the benchmark interest rate will provide an opportunity to manage these various factors consistently."
He continued, "We need to consider three issues: how quickly to raise the rate, how far to raise it, and the answers to these questions will be reflected in the dot plot released today."
The dot plot revealed that out of 21 projections, 10 indicated a level above the current interest rate of 3.00%, while 7 projected 2.75%. A total of 19 out of 21 projections were above the current rate, indicating that most committee members expect an interest rate increase within six months.
Although the committee has held the rate steady for the eighth consecutive time, there were minority opinions advocating for an increase during the monetary policy meeting. Governor Shin remarked, "Considering the uncertainty, we only have statistics on core inflation up to April, so there was a suggestion to weigh the uncertainty more heavily. The minority opinions can generally be viewed as strategic differences under the same overarching perspective."
* This article has been translated by AI.
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