[Edaily Reporter Jang Young-eun ] Bank of Korea Governor Shin Hyun-song said on the 23rd, “At every Monetary Policy Committee meeting, we make decisions based on the data without any preconceptions.” This was in response to criticism that the market is treating a further interest rate hike by the Bank of Korea as a foregone conclusion.

During the comprehensive parliamentary audit held by the National Assembly’s Finance, Economy, and Planning Committee that day, Governor Shin said, “If we try to bring inflation down to the target level suddenly, there is a risk of resorting to excessive monetary policy.” He added, “Monetary policy is always formulated with a medium-term perspective,” explaining that “finding the appropriate balance between economic activity and inflation is best practice.”

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 made because, amid heightened external uncertainties, the committee needed time to assess the impact of the consecutive rate hikes in July and August. At a press conference, Governor Shin revisited the expression he had used at the time of the August hike—that “we used a hoe to block what should have been blocked with a shovel”—and described this decision to hold rates as “the fruit of that hoeing.”

The Bank of Korea projected that this year’s consumer price and core inflation rates would generally align with the August forecasts (2.7% and 2.5%, respectively), but predicted they would exceed the previous forecasts (2.3% and 2.5%) next year. Governor Shin assessed that inflation would continue to exceed the target level for a considerable period due to the pass-through of heightened cost pressures and expanding demand-side pressures. He indicated that the 2% inflation target would likely be reached the year after next.

Governor Shin reiterated on the same day, “We judge that the growth rate will significantly exceed the August forecast.” He added, “While core inflation is expected to be broadly in line with the August forecast this year, we anticipate it will be slightly higher than the 2.5% projected in August for next year,” and stated, “We will implement policies to ensure inflation converges smoothly toward the target.”

The market is focusing on the possibility of an additional rate hike at the Monetary Policy Direction Meeting—the last Monetary Policy Committee meeting of the year—scheduled for the 26th of next month.