[2026 Parliamentary Audit] Shin Hyunsong: "What Matters for the Pace of Rate Hikes Is the Inflation Trend"

Bank of Korea Governor Shin Hyun-song said on October 12 that "the most important factor" in deciding when to raise the base rate again is "the trend in inflation."

Bank of Korea Governor Shin Hyun-song answers lawmakers' questions during a parliamentary audit at the Bank of Korea in Jung-gu, Seoul, on the 12th. Photo by Joint Press Corps, Yonhap News.

Shin gave the response during a parliamentary audit of the Bank of Korea by the National Assembly's Finance and Economy Committee that day, answering a question from Democratic Party lawmaker Yoon Hoo-deok about whether the Bank would raise rates again in October or November, or early 2027.

"Monetary policy is guided by economic conditions at the time, including financial conditions. The most important factor is the trend in inflation," Shin said. "One point I would particularly emphasize is that low-income and vulnerable groups are the ones who suffer most from inflation."

He continued, "Controlling inflation can also help ease polarization, but vulnerable borrowers also feel the pain of monetary policy. I think this is an issue that requires other policy measures, especially close coordination with the government."

Responding to Democratic Party lawmaker Jung Tae-ho's concern that higher interest rates could worsen the structure of household loans, including by raising delinquency rates, Shin said, "As repayment burdens grow during periods of rising interest rates, such effects can occur." He added that the Bank of Korea "always assesses economic agents' ability to adjust when setting interest rates."

"Inflation is the most important indicator and compass for monetary policy decisions," he continued. "How the real economy is affected by interest rate decisions is also a very important consideration." He added, "In pursuing our inflation target, we will keep the overall economy on an even keel and implement policies that allow us to reach our destination as smoothly as possible, without shocks."

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