Bank of Korea governor nominee Shin Hyun-song said he could move to respond with monetary policy if the rise in international oil prices driven by the Middle East war continues and spills over into inflation. The comment hinted at the possibility of a benchmark rate hike if high inflation drags on.
Shin said at a parliamentary confirmation hearing of the Strategy and Finance Committee on the 15th, "If the Middle East situation is not resolved quickly, price pressures could build." He added, "If it is a temporary shock, there is no need to respond with monetary policy, but if the situation is prolonged and affects prices across the board, there will also be a role for monetary policy."
On policy priorities between growth and prices, he put the emphasis on price stability. He said, "When the two goals conflict, it is important which side to weigh," adding, "In an economy like Korea's that is sensitive to oil prices, I would focus on price stability."
He drew a line against views that see him as a "pragmatic hawk (preferring monetary tightening)." He rejected the assessment that he prefers raising the benchmark rate for price stability. Shin said, "The dichotomy of dividing into hawks and doves is not desirable," and added, "I will make policy decisions flexibly based on communication with economic agents."