BOK raises possibility of a policy rate hike amid above-target inflation and accumulated current account surpluses
BOK Governor Shin Hyun-song 7month 9day said that, with inflation exceeding the target, a policy rate hike would be necessary at an appropriate time. The large accumulation of current account surpluses leaves room for the won to strengthen, and 6month household lending increased by 8trillion 3000hundred million won, prompting the BOK to warn that it was nearing its annual management target.
Bank of Korea Governor Shin Hyun-song 7month 9day said that, as inflation was exceeding the target, a policy rate hike would be necessary at an appropriate time. The remarks suggest that adjusting the policy rate is a realistic option.
The BOK assessed that the inflation rate could exceed the target. This indicates that monetary policy will be managed based on inflation trends.
Governor Shin said that the large accumulation of current account surpluses leaves considerable room for the won to turn stronger. He indicated that exchange-rate movements could be linked to capital inflows and outflows.
However, Governor Shin noted that the possibility of a sustained decline in stock prices is limited. This means that the possibility of a structural shock across the market is considered low.
The Bank of Korea explained that it also takes financial stability into consideration. It reaffirmed its intention to pursue measures for price management and financial stability in parallel.
Meanwhile, 6monthly household lending was 8trillion3000hundred million won higher. The Bank of Korea warned that this figure is approaching the annual management target.
Bank of Korea officials said they would continue making policy decisions based on future interest-rate and lending statistics.