In a written response to a National Assembly inquiry, the central bank stated that "the possibility of extra budget spending stimulating inflation is considered low, given the current economic circumstances."
This stance comes as South Korea's economy faces headwinds following the implementation of martial law by President Yoon Suk Yeol. Growth projections have fallen below potential, raising concerns about economic stagnation.
The BOK acknowledged that the specific impact of additional spending on prices could vary. However, the bank emphasized that current price trends remain stable and that GDP growth is expected to undershoot its potential level this year.
These comments align with recent statements from BOK Governor Rhee Chang-yong, who expressed support for fiscal expansion at a parliamentary hearing last month.
"Downside risks in the current situation justify greater use of fiscal policy," Governor Rhee stated.
Cha Gyu-geun, a lawmaker from the opposition Rebuilding Korea Party, cited a report from Hyundai Research Institute, which estimated that additional fiscal spending of more than 20 trillion won would be necessary to boost economic growth from the projected 1.7 percent to the potential growth rate of 2 percent.
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