[Edaily Reporter Lee Jeong-yoon ] Bank of Korea Governor Shin Hyun-song predicted that next year’s consumer price inflation rate will exceed the previous forecast of 2.5%. He also forecast that economic growth rates for this year and next will be higher than projected in August. Given that stronger-than-expected growth is increasing inflationary pressure, the Bank of Korea plans to adjust its monetary policy accordingly.

During the comprehensive parliamentary audit of the National Assembly’s Finance, Economy, and Planning Committee on the 23rd, Governor Shin responded to a question about monetary policy from Democratic Party of Korea lawmaker Kim Nam-jun, stating, “We are projecting higher growth rates for this year and next year than in our late-August forecast.”

He added, “We will release new projections following the November Monetary Policy Committee meeting. Due to this strong growth, we expect next year’s inflation rate to be slightly higher than the 2.5% forecast from late August,” and noted, “We plan to conduct monetary policy accordingly.”

In its economic outlook released last August, the Bank of Korea projected economic growth of 3.3% for this year and 2.9% for next year. It forecast next year’s consumer price inflation rate at 2.5%. These remarks are interpreted as suggesting the possibility of an upward revision to the inflation forecast, as growth has proven stronger than expected, driven in part by robust semiconductor exports.

Consequently, the market is also paying close attention to the possibility of further benchmark interest rate hikes. This is because if both growth and inflation forecasts rise simultaneously, the need for tight monetary policy to stabilize prices could increase.

Previously, the Bank of Korea’s Monetary Policy Committee unanimously decided the previous day to keep the benchmark interest rate unchanged at 3.00% per annum. This decision was based on the judgment that it was necessary to assess the effects of the policy following two consecutive rate hikes of 0.25 percentage points each in July and August.

During the parliamentary hearing that day, Governor Shin responded “Yes” to Representative Kim’s question asking whether the central bank intended to assess the effects of the past two rate hikes before deciding on any further adjustments.

Rep. Kim emphasized that, given market speculation that the final level of the benchmark interest rate could range from 3.50% to 3.75% annually, it is necessary to closely monitor the impact of strong economic growth on inflation, the real estate market, and household debt. However, Governor Shin did not provide specific figures regarding the final benchmark interest rate level during the hearing.