Bank of Korea deputy chief says monetary policy to be made 'very carefully'

The new deputy governor of the Bank of Korea, Kwon Min-soo, has signaled a cautious approach to monetary policy, stating that decisions will be made with great care and flexibility. On his first day in the three-year term, Kwon emphasized the need to consider a range of factors, including economic growth, inflation, and financial stability, alongside the potential side effects of interest rate increases.

Kwon noted that while economic growth is showing stronger-than-expected improvement, inflation remains above the central bank's target. He also highlighted ongoing risks to financial stability, foreign exchange volatility, and geopolitical uncertainties as crucial elements influencing policy.

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It is time to make policy decisions very carefully, and flexibly if needed.

Last month, the Bank of Korea implemented its first interest rate hike in three and a half years, indicating expectations of further increases as robust economic growth in Asia's fourth-largest economy fueled inflation concerns. The bank's monetary policy board is scheduled to convene again on August 27.

When asked about his stance as a "hawk" or "dove," Kwon stated that policy decisions would be data-driven and based on prevailing economic conditions. He also commented on the South Korean won, which has strengthened significantly in recent months, noting that while economic fundamentals suggest further appreciation, external factors will keep it a variable to monitor in policy considerations.

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Economic growth and inflation will have to be considered, as well as the aspect of financial stability, while there could also be policy effects as well as side effects from raising interest rates.