Shin Hyun-sung, Governor of the Bank of Korea, projected that the inflation rate will approach the target level of 2% by 2028.
During a press briefing following the Monetary Policy Committee meeting on October 22, Shin stated regarding the timeline for achieving the inflation target, "It is not necessary to achieve exactly 2% next year. While I expect inflation to be above 2% next year, I believe we will get closer to the target around the year after next."
He explained, "The goal for inflation is to achieve it in the course of implementing monetary policy, taking into account growth and other economic conditions, rather than achieving 2% immediately."
Shin also forecasted that next year's inflation outlook would be higher than previously expected. He anticipated that the core inflation rate for next year would be slightly above the August forecast of 2.5%.
Additionally, he described the decision to maintain the current interest rate as a result of securing policy flexibility through prior preemptive rate hikes. The Bank of Korea froze the benchmark interest rate at 3.00% after raising it twice in July and August.
Shin noted, "The consecutive interest rate hikes have provided us with considerable flexibility," adding that this allows the bank to implement policies tailored to domestic conditions without being swayed by decisions from the U.S. Federal Reserve or market situations.
Regarding the possibility of further rate hikes by the U.S., he maintained a cautious stance. He remarked, "Since the dollar is a key currency, the Fed's decisions significantly impact financial conditions and assets worldwide, and Korea cannot remain unaffected. However, we are closely monitoring the direction of the Fed's monetary policy and are communicating at the Bank for International Settlements (BIS) meetings."
* This article has been translated by AI.
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