Commissioner Shin Seong-hwan of the the Bank of Korea's monetary policy committee (Monetary Policy Board) on the 11th said it is "a very burdensome situation to discuss a base rate cut." Even Shin, who prefers a "currency easing policy" that boosts the economy by cutting the base rate, did not rule out a rate hike.
On this day, one day before stepping down at the end of the term, Commissioner Shin stated accordingly at a press briefing held at the Bank of Korea in Jung District, Seoul, saying, "I think inflationary pressures are strong, and uncertainty over future prices is also high." Shin added that policy should prioritize prices over economic growth in conducting currency policy. Shin said inflation driven by a U.S.-Iran war should be addressed first.
Commissioner Shin also did not rule out the possibility that the pace of base rate hikes could accelerate or the magnitude could expand. If the current situation of international oil prices hovering above $100 per barrel continues through year-end, the Monetary Policy Board could consider aggressive base rate hikes. Shin said, "Based on the current situation, oil prices will be $90 (per barrel) at year-end," adding, "If the period of high oil prices is prolonged, the fight against inflation will be much fiercer than expected."
Regarding the won-dollar exchange rate against the U.S. dollar, Commissioner Shin argued that the won is excessively undervalued. However, Shin said, "Judging from several developments, the (won-dollar rate) seems likely to stabilize downward from the current level."
Commissioner Shin suggested that a safety mechanism is needed to prepare for a global financial crisis. Shin said, "As the linkage between the domestic financial market and the international financial market strengthens, the intensity of herding can increase," and asked, "Please consider what tools could be created to stabilize the financial market when a significant shock hits."
Commissioner Shin joined the Monetary Policy Board in July 2022 on a recommendation from the Korea Federation of Banks. Most recently, through the Monetary Policy Board in Apr., Shin cast dissenting opinions seven times. In particular, at the Monetary Policy Board meetings in Aug., Oct., and Nov. last year, Shin alone argued for cutting the base rate and is regarded as a Commissioner who favors currency easing policy.