Bank of Korea Governor Shin Hyun-song stated on July 29 that it is necessary to continue the current trend of interest rate hikes. He reiterated his intention to maintain a tightening stance after raising the benchmark rate by 0.50 percentage points earlier this month.
During a report to the National Assembly's Finance and Economy Committee, Governor Shin said, "The timing and pace of any further increases will be determined by assessing inflationary pressures, the trajectory of economic improvement, and financial stability conditions."
He projected that the economy would continue to grow steadily, noting, "The expansion of global artificial intelligence (AI) has led to growth primarily in the semiconductor sector. I expect the favorable conditions in the semiconductor market to persist, gradually impacting other sectors and sustaining robust growth."
Regarding inflation, Governor Shin anticipated that it would remain above target levels. He explained, "Given the uncertainties surrounding international oil prices due to the situation in the Middle East, the ongoing impact of increased costs and exchange rates, and the growing demand pressures from income improvements, I expect inflation to continue rising above target levels for a considerable period."
He assessed that external uncertainties have increased, leading to greater volatility in key price variables in the financial and foreign exchange markets. Despite the high uncertainty in external conditions, he reported that the domestic financial system remains generally stable, supported by the expanding growth of the real economy and the resilience of financial institutions.
However, Governor Shin noted that the high volatility in financial and foreign exchange markets, along with the rising housing prices in the metropolitan area, pose potential risks for financial imbalances.
Additionally, prior to his report, Governor Shin apologized for the controversy surrounding his children's nationality that arose during the confirmation process. In response to a request from People Power Party lawmaker Im Yi-ja to officially apologize for allegations of false residency registration due to his eldest daughter not reporting her loss of Korean nationality, he stated, "I apologize to the public for the confirmation process not proceeding smoothly. The issue regarding my children's nationality has now been resolved."
* This article has been translated by AI.
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