Bank of Korea Governor Shin Hyun-song said the central bank will judge the appropriate moment to act based on a comprehensive review of growth, inflation and other economic conditions, rather than pinning down a specific terminal rate for its rate-hike cycle. He said growth this year and next is expected to come in higher than previously projected, and that inflation next year would also exceed the earlier forecast of 2.5%.
Shin made the remarks on the 23rd during a comprehensive parliamentary audit by the National Assembly's Finance, Economy and Planning Committee, responding to a question on the terminal rate from Rep. Kim Nam-joon of the Democratic Party of Korea. "What matters is not where the rate-hike cycle ends, whether at 3.50% or 3.75%, but judging the right time to act by carefully examining the ripple effects across each part of the economy, given how strong growth is," he said.
Shin said the Bank of Korea now sees higher growth for this year and next than it projected in late August. "Because of this strong growth, we expect inflation next year to come in slightly above the 2.5% we projected in late August," he said.