SEOUL, May 4 (Reuters) – The Bank of Korea’s senior deputy governor said forward guidance on monetary policy would become more hawkish at the next meeting later this month, as it was time to consider interest rate hikes, according to pool reports shared by the central bank on Monday.
“Since April, the impression has been that economic growth will not be much lower than 2.0%, while inflation will be higher than 2.2%. Given that, it is time to stop rate cuts and start thinking about rate hikes,” said Ryoo Sang-dai, a member of the central bank’s seven-seat monetary policy board.
Ryoo said inflation pressure was still high even after recent government measures to control consumer prices, such as nationwide fuel price caps. He made the remarks at a press conference on Sunday held on the sidelines of the annual Asian Development Bank meeting in Samarkand, Uzbekistan.
Last month, the central bank held interest rates steady in a wait-and-see approach as heightened uncertainty from the Middle East conflict warranted more monitoring of its impact on growth and inflation.
Ryoo’s remarks came after data showed late last month that Asia’s fourth-largest economy delivered its fastest growth in nearly six years last quarter, smashing forecasts on a boom in chip exports.
Ryoo said he was not too concerned about the economy’s over-reliance on the chip sector, adding that the current booming cycle was expected to be longer than in the past and that there also were other sectors unlike in the case of chip rival Taiwan.
On the won hovering at 17-year lows, Ryoo said the current level of foreign exchange rates around 1,470 to 1,480 won per dollar was higher than the past but not viewed as problematic.
The Bank of Korea will hold its next policy meeting on May 28, which will be the first for Governor Shin Hyun-song, who took office on April 21.
(Reporting by Jihoon LeeEditing by Ed Davies)
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