Bank of Korea to keep its monetary policy focus on taming inflation in 2023

Bank of Korea Governor Rhee Chang-yong [Source : Joint Press Corps]

South Korea’s central bank will focus its monetary policy on taming inflation as consumer prices are expected to grow faster than its 2-percent target next year.

Inflation is expected to ease steadily from the second half of 2023 after peaking in the first half but it will likely to stay above the bank’s target of 2 percent, said Bank of Korea Governor Rhee Chang-yong during a press conference on Tuesday, as he stressed the bank’s needs to continue its monetary policy focusing on consumer prices.

Consumer price growth is expected to stay around 5 percent for a while but the pace will ease as downward pressure on economy builds up at home and globally. However, changes in economic and labor market conditions would have a bigger impact on inflation than the times of low inflation, warned the BOK chief.

Uncertainty is great regarding the easing pace of inflation, noted Rhee, vowing to take a detailed approach by carefully studying the change in interest rate policy directions at the U.S. Federal Reserve and world’s other major central banks on top of the impact on local economy.

Future policy directions will be discussed in depth at next month’s monetary policy committee meeting, Rhee said as he vowed to pay a special attention to the possible side effects that interest rate hike could create on the economy.