Business · Economy · 1 hr ago
Bank of Korea chief says inflation will stay above target, signals possible further hikes
Bank of Korea Governor Shin Hyun-song said inflation in South Korea is likely to remain above the bank’s 2% target for some time.
He pointed to rising costs and growing pressure from stronger demand as the economy recovers.
Semiconductor exports and investment have supported growth, while improving incomes are helping consumer spending recover.
The bank raised its benchmark interest rate twice, in July and August, bringing it to 3%.
Shin said future decisions on whether and when to raise rates again will depend on inflation, economic activity and financial stability.
He also warned that rising home prices in the Seoul region and growing household debt remain concerns.
The bank plans to keep monitoring these conditions as it decides its next policy steps.
Bank of Korea Governor Shin Hyun-song said inflation is expected to remain above the 2% target for a considerable period.
He said the timing and pace of any further interest-rate increases would depend on economic conditions.
Shin cited persistent cost pressures and growing demand-side pressures as reasons for the inflation outlook.
He said strong semiconductor exports and investment, alongside recovering consumption, are expected to support economic growth.
He also warned that rising housing prices in the Seoul metropolitan area and household debt pose financial stability concerns.
- Who
- Bank of Korea Governor Shin Hyun-song.
- What
- He said inflation is likely to remain above the 2% target for a considerable period and that the timing and pace of further rate increases will be decided in light of economic conditions.
- When
- October 12, 2026.
- Where
- At the Bank of Korea headquarters in central Seoul, during a parliamentary audit.
- Why
- Accumulated cost pressures are continuing to pass through, while demand-side inflation pressures are increasing.
This story does not have two clearly opposing sides.
Inflation is expected to continue rising above the target level for a considerable period as the pass-through of accumulated cost pressures continues and demand-side pressures gradually grow.
It is important to prevent the spread of inflation through a pre-emptive response.
We plan to decide the timing and pace of further increases while closely monitoring inflation and economic trends and financial stability.
The Bank of Korea raised its benchmark interest rate from 2.50% to 2.75%.
The Bank of Korea raised the rate by 0.25 percentage points to 3.00%.
Shin told a parliamentary audit that inflation would remain above target and that further rate increases would depend on economic conditions.
- Inflation target
- 2%
- Benchmark rate after August increase
- 3.00%
- July rate increase
- From 2.50% to 2.75%
- August rate increase
- 0.25 percentage points
- Governor
- Shin Hyun-song
Sources
Related news
South Korea plans 3 trillion won fund for overseas construction
South Korea’s exports hit a record for Oct. 1–10, led by semiconductors
Lotte to present mobility businesses at Japan trade event
Gwangju semiconductor plan lifts shares in regional companies
HiteJinro begins making Kirin Ichiban beer in South Korea
Bank of Korea governor says early rate hikes helped steady markets
LH chief seeks major hiring and financial support to expand housing supply
Won reaches its lowest level against the dollar in about two years
South Korean Won Reaches Two-Year High as Oil Prices Fall
South Korea’s September bond trading rose as individuals bought and foreigners sold
KakaoBank launches mobile banking services for foreign residents in South Korea
