The new governor of the Bank of Korea pledges to implement prudent and flexible monetary policy during the Middle East crisis

Source: Global Market Broadcast

Shin Hyun-song, the new Governor of the Bank of Korea, pledged on Tuesday to continue pursuing a prudent and sound monetary policy as uncertainties stemming from the ongoing Middle East crisis intensify.

Shin Hyun-song made these remarks during his inaugural speech, officially beginning his four-year term, succeeding outgoing Governor Lee Chang-yong.

“Following the war in the Middle East, global oil prices have risen, simultaneously increasing upward pressure on inflation and downward pressure on economic growth. Financial market volatility has intensified and the risk of financial imbalances persists,” Shin Hyun-song stated.

“Given the uncertainties in the inflation and economic growth trajectories, monetary policy should be implemented cautiously and flexibly to ensure stability in prices and financial markets,” he added.

Shin Hyun-song also pledged to enhance the effectiveness of monetary policy by reassessing existing policy tools to relieve the complex trade-offs among policy variables and actively utilizing market price indicators to ‘strengthen early warning capabilities.’

At its most recent rate meeting earlier this month, the Bank of Korea maintained the benchmark interest rate at 2.5%. In light of the Iranian conflict that erupted at the end of February and has escalated into a broader regional crisis, rattling global markets and economies, the Bank of Korea has adopted a cautious stance.