Bank of Korea governor reaffirms need for a base-rate hike due to rising prices
Shin Hyun-song, governor of the Bank of Korea, said 7month 9day that a base-rate hike was necessary because prices were above the target. On the same day, the Bank of Korea pointed to room for the won to strengthen and the accumulation of a current-account surplus, and reported that household loans surged by 6month 8trillion3000won.
Shin Hyun-song, governor of the Bank of Korea, said 7month 9day that a base-rate hike was necessary because prices were above the target. The remarks could have a direct impact on financial markets and borrowing costs.
The governor assessed that the inflation rate could exceed the target and reaffirmed the position that a base-rate hike was necessary. In the remarks, he said that interest-rate decisions would be reviewed based on the “appropriate timing.”
At the same event, Governor Shin pointed out that the large accumulation of a current-account surplus left considerable room for the won to turn stronger. The remarks included the implication that net capital inflows into the country could affect the exchange rate.
The Bank of Korea 6said household lending in the month grew by 8trillion3000won, warning that it was nearing the annual management target. It added that the sharp increase in household lending was a concern from the perspective of financial stability.
Governor Shin said in these remarks that, regarding the stock market, the possibility of a sustained decline was limited. The remarks were made 7month 9at a publicly disclosed event.
The Bank of Korea made clear that it would consider inflation and household lending conditions together in future monetary policy decisions.