Bank of Korea Governor Shin Hyun-song said the country's cap on oil prices has helped slow consumer inflation but is not a program that can be sustained over the long run. Fiscal room allows the measure to stay in place for now, he said, but any decision must weigh conditions in the Middle East, global crude prices and the burden on households.
Asked at a National Assembly finance and economic planning committee audit on the 23rd how long the price cap could be maintained, Shin said it had "blocked the effect of spilling over into other prices, and we estimate it lowered inflation by about 0.6%."
"The question is sustainability — how long it can go on," Shin said. "In Korea's case, fiscal conditions are relatively sound, so there is room to keep it going a little longer, but it does not appear to be a long-term program."