Seoul:Bank of Korea (BOK) Governor Shin Hyun-song announced that the central bank would continue its hawkish monetary policy in light of anticipated higher economic growth and interest rates. This statement was made during a parliamentary audit at the National Assembly.
According to Yonhap News Agency, Shin emphasized the difficulty of returning to ultra-low interest rates and highlighted the need for effective policy implementation in preparation for an environment characterized by high growth and high interest rates. The BOK has recently adopted a more hawkish stance due to rising inflation and solid economic growth.
The central bank raised the benchmark interest rate to 3 percent in July and August, marking consecutive hikes for the first time since January 2023. This increase was part of a tightening cycle that began in April 2022. Despite holding the rate steady at its latest meeting, the BOK stressed that the pause does not indicate a shift from its hawkish approach, citing factors like inflationary pressures from rising oil prices, Middle East uncertainties, and stronger-than-expected economic recovery.
Shin projected that the South Korean economy would grow by more than 3 percent this year and next, driven by strong AI-related exports. Although he did not specify exact figures for this year, he noted that the OECD had revised South Korea's 2026 growth forecast to 3.7 percent. The BOK also raised its 2026 growth projection to 3.3 percent from 2.6 percent in August, with another upward revision expected in November.