Shin Hyun-song: "Inflation Hits Low-Income Households Hardest... We Will Stay Firmly on Course Toward 2% Target"

At CNN's "Global Perspectives" panel discussion
Lessons from the foreign exchange crisis... Must rein in excessive leverage before it goes too far

"We are resolute. We are firmly moving toward our 2% (price stability) target."

Shin Hyun-song, Governor of the Bank of Korea. Bank of Korea.

Bank of Korea Governor Shin Hyun-song reiterated his commitment to maintaining a tight monetary policy until inflation is close to the price stability target. Speaking at a panel discussion at CNN's "Global Perspectives" in Bangkok, Thailand, on October 14, held in conjunction with the International Monetary Fund (IMF) annual meetings, Shin said, "From a central bank's perspective, the most important thing is to always bear in mind that inflation hits low-income households the hardest." He stressed, "This is the key reason we need to stabilize prices, and why it is absolutely essential to conduct monetary policy properly."

Shin said, "In terms of real economic activity, the impact of the AI investment boom is outweighing the adverse effects of the war in the Middle East," but added, "In terms of prices, both factors are pushing inflation higher."

He said that key variables such as growth and inflation depend on how long the massive AI investment boom lasts. "We need to look at what is happening with Big Tech (hyperscalers)," he said. "Forecasting institutions expect more than $1 trillion in investment over the next three to four years, which is significantly boosting and energizing global trade. Ultimately, this is having a positive impact on the Korean economy as well."

Noting that several Asian countries, including South Korea and Thailand, experienced foreign exchange crises in the late 1990s, he stressed, "This is a lesson ingrained in our DNA when it comes to addressing macro-financial stability. We must be able to rein in excessive leverage or overheated markets before they go too far."

Shin Hyun-song, governor of the Bank of Korea (second from left), speaks during a panel discussion at CNN's "Global Perspectives," held on Oct. 14 in Bangkok, Thailand, in conjunction with the IMF Annual Meetings. Screenshot from CNN Global Perspectives' YouTube livestream.

The assessment of the current situation is based on the Financial Vulnerability Index (FVI). Shin said, "The FVI, with its second-quarter 1997 level - just before the Asian financial crisis - set at 100, remains at around 46, its long-term average." He added, "Securing financial stability is one of the Bank of Korea's core missions, so we keep a close eye on this indicator at all times," and stressed, "We will ensure that the situation does not deteriorate out of control."

Meanwhile, Ngozi Okonjo-Iweala, Director-General of the World Trade Organization (WTO), who joined Shin in the discussion, spoke about how AI is reshaping global trade. She said, "The WTO raised its forecast for merchandise trade growth this year from 1.9% to 3.9%," adding "AI contributed nearly 50% of that increase." Bank of America International Chairman Bernard Mensah "said companies are making decisions based not only on production costs but also on supply chain resilience and market access, and that these changes are driving capital flows.

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