Lee Suhyung, Monetary Policy Board Member: "Inflation Not an Urgent Concern Yet... May Dot Plot Could Differ From February"

"Not a Particularly Alarming Situation Compared to Financial Stability and Growth"


February Dot Plot Did Not Factor in Iran Conflict


Upward Risk to Inflation vs. Downward Risk to Growth... Could Differ From February

"Inflation is not a particularly alarming issue compared to other objectives such as financial stability and growth. The dot plot in May could differ from the results in February."

Suhyung Lee, a member of the Monetary Policy Committee of the Bank of Korea, is speaking at a press conference held at the Bank of Korea in Jung-gu, Seoul, on the morning of the 17th. Bank of Korea

Middle East Crisis Has Significant Impact on Prices, But Not an Urgent Concern

Lee Suhyung, a member of the Monetary Policy Committee at the Bank of Korea, stated at a press conference held at the Bank of Korea in Jung-gu, Seoul on the 17th that, speaking in his personal capacity as a committee member, "(A war between the US and Israel and Iran) is inevitably having a significant impact on prices." He explained that supply and demand issues for products that form the backbone of economic activity—such as oil, liquefied natural gas (LNG), and naphtha, used commonly across various industries—are being reflected in prices and acting as an upward risk to inflation.

The Bank of Korea's economic outlook in February assumed an average annual Brent crude oil price of 64 dollars per barrel. Lee pointed out, "The current price is much higher than that, so we need to take this into account." He noted that not only the elevated price itself but also the duration of the price increase is an important consideration. He added, "Since the situation changes daily in terms of whether it will be resolved quickly, it is still too early to determine how much the upward risk will actually impact the Korean economy."

However, he assessed that the "urgency" of inflation at present is not as great compared to other factors such as financial stability and growth. Lee said, "Although the Iran situation needs to be reconsidered, it is not yet a particularly worrying issue compared to other objectives. This is something that should be monitored until the next Monetary Policy Board meeting (scheduled for April 10). We need to watch how long this will persist before making a judgment. At this point, I am not confident enough to speak to the direction," he said, adding that from a monetary policy perspective as well, it is necessary to observe the situation for the time being before making any decisions.

Lee Suhyung, a Monetary Policy Committee member of the Bank of Korea, is speaking at a press conference held at the Bank of Korea in Jung-gu, Seoul, on the morning of the 17th. Bank of Korea

Upward Risk to Inflation vs. Downward Risk to Growth... May Dot Plot May Differ From February

He explained that the contents of the so-called "K-dot plot" from February, which signaled a prolonged period of holding the policy rate steady, "could change." At that time, the impact of the Middle East crisis had not been taken into consideration.

Lee stated, "Any medicine has both effects and side effects, but right now, not only the real economy but also the financial side is reacting very differently, and the situation can change multiple times a day. This means we need to be cautious about which effect will dominate." He continued, "Since the February dot plot was published, upward risks to inflation have emerged, and on the growth side, there is downward pressure due to uncertainty over rising input prices. As a result, there could be differences from the February results."

Regarding the exchange rate, he commented, "Personally, I don't think it's at a level to be very concerned about at this stage." He explained that the Middle East crisis has led to increased demand for safe assets, resulting in a stronger US dollar and a relative depreciation of the Korean won, but these are not factors unique to Korea. He added that recent high volatility is also the result of external factors. Lee said, "The current account balance in terms of dollar supply and demand is likely to remain solid, and recently, the overseas investment portion by residents has also shown considerable stability," stating that he is making this assessment based on the premise that these factors are interacting in a complex manner.

This content was produced with the assistance of AI translation services.