Shin Hyun-song officially took office as Bank of Korea governor on April 21, beginning a four-year term after a contentious confirmation hearing process. He assumes the post as concerns rise over stubborn inflation and weakening growth.
In his inaugural address, Shin said he would pursue “price stability and financial stability through cautious and flexible monetary policy,” signaling a calibrated approach as external conditions shift rapidly.
The central bank has said it expects this year’s economic growth to fall below 2.0%, while consumer inflation is likely to exceed its previous forecast of 2.2% by a significant margin. Geopolitical uncertainty in the Middle East has pushed up international oil prices, adding to cost pressures. Shin said supply shocks tied to the Middle East war have “further increased uncertainty” over the paths of inflation and growth, with upward pressure on prices and downward pressure on activity rising at the same time.
Markets have often labeled Shin a “pragmatic hawk,” leaning toward the possibility of rate increases. Shin rejected a simple hawk-dove divide, saying it is better to read broader economic conditions, assess how the financial system and the real economy interact, and respond flexibly.
Still, he suggested policy action could be needed if inflation risks intensify. At a National Assembly confirmation hearing on April 15, Shin said that if Middle East risks persist and spill over into core inflation or inflation expectations, producing second-round effects, “monetary policy must be used.”
On financial stability, Shin called for a broader lens as boundaries blur between banks and nonbanks and between domestic and overseas markets. He said relying only on traditional soundness indicators makes it harder to detect risks, and urged greater use of market price indicators to strengthen early-warning functions, better access to information on the nonbank sector, and expanded analysis to include off-balance-sheet transactions and nontraditional financial products.
Shin also outlined priorities for internationalizing the won and advancing digital finance. He cited 24-hour foreign exchange trading and building an offshore won settlement system as tasks to develop currency infrastructure in line with South Korea’s economic standing. He also said the second phase of “Project Hangang” will aim to expand the use of a central bank digital currency and deposit tokens.
He indicated the bank will continue to speak out on structural issues highlighted by his predecessor, Lee Chang-yong. Shin said demographic change, widening inequality, and problems tied to real estate and household debt are key variables shaping the environment for monetary policy, adding that the central bank’s in-depth research and policy recommendations should help point the economy in a desirable direction.
* This article has been translated by AI.
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