Bank of Korea Deputy Governor Yoo Sang-dae said, "It is time to consider stopping interest rate cuts and raising rates."
Yoo held a press briefing on the 3rd (local time) at a hotel in Samarkand, Uzbekistan, where he was visiting to attend the Asian Development Bank (ADB) annual meeting, and stated accordingly that "there is a possibility that a signal (that a rate hike is possible) could emerge at the May meeting of the the Bank of Korea's monetary policy committee."
Yoo said, "Until the end of last year, I thought we could cut (the base rate) one more time and wrap up the easing cycle, but with the U.S.-Iran war breaking out this year, the concern has grown," adding, "My personal view is that we may shift from cuts to a hiking cycle."
Regarding the dot plot showing the distribution of the Monetary Policy Board members' six-month rate outlook, Yoo said, "The probability distribution could rise a bit overall," but added, "Because uncertainty is high, we will watch conditions through the May Monetary Policy Board meeting and decide policy."
On the exchange rate, Yoo said, "The 1,470–1,780 won range does not seem to be seen in the market as highly problematic," adding, "When the exchange rate is high, there can be issues such as weaker foreign-currency liquidity, but (at present) my understanding is that this is not the case."
Yoo assessed that while the economic growth rate will not fall much from the initially expected 2%, inflation could rise above the 2.2% forecast. On prices in particular, he said, "Even taking into account various government policy responses, we are facing considerable upward pressure."
Regarding criticism that dependence on semiconductors has increased, he said, "In the past, when the semiconductor cycle was good, domestic consumption rose, construction picked up, and the economy improved, but one snag is that this trickle-down effect is absent," while adding, "Recently, we are slightly expecting the semiconductor cycle to be considerably longer than past cycles."