Bank of Korea to assess conditions to determine pace and timing of tightening, says board member

The Bank of Korea will evaluate various conditions, both external and internal, to decide the speed and timing of future interest rate hikes, according to a board member. Kim Jong-hwa stated this in remarks accompanying the central bank’s semiannual monetary policy report. He highlighted that the economy's growth is expected to stay strong, while inflation is anticipated to persist above the target for an extended period.

The Middle East conflict and the surge in exports are identified as key drivers of price pressure. The bank will also closely monitor the consequences of the previous two interest rate increases. Additionally, the Bank of Korea anticipates that global investments in artificial intelligence, which have contributed to South Korea’s semiconductor export boom, will continue to grow due to increasing demand and heightened competition.

In a recent move, the bank raised its benchmark interest rate by a quarter percentage point to 3.00% for the second consecutive hike, given the inflation rate remaining above target and ongoing financial stability risks.