New Bank of Korea Deputy Governor: Inflation Exceeds Target, Cautious Policy Needed

Kwon Min-soo, the newly appointed Deputy Governor of the Bank of Korea, has indicated that inflation is currently surpassing the central bank's target. He also pointed to persistent risks associated with household debt and housing prices, underscoring the need for cautious and adaptable policy-making. In his inaugural address, Kwon noted that while economic growth is showing improvement due to a robust semiconductor sector, inflation remains elevated, and financial imbalances, particularly concerning household debt and real estate, continue to pose risks.

"Given the exchange rate volatility and geopolitical and trade risks, it is a time when cautious and flexible policy judgments are needed," Kwon stated. He stressed the importance of carefully managing the "soft landing" of household debt while also reinforcing the lender of last resort function during crises. Additionally, he pledged to enhance the analysis of default risks in vulnerable sectors.

Kwon identified strengthening the financial and foreign exchange market response capabilities and promoting the internationalization of the Korean won as key priorities. He also mentioned continuing efforts towards inclusion in the World Government Bond Index (WGBI) and pursuing inclusion in the Morgan Stanley Capital International (MSCI) advanced index.