[2026 Parliamentary Audit] Shin Hyun-song: "Oil Price Cap Lowered Inflation... Not a Long-Term Policy"
Comprehensive Audit by the National Assembly's Finance and Economy Planning Committee
Bank of Korea Governor Shin Hyun-song said on the 23rd that the oil price cap had helped lower inflation, but reiterated that it was not a measure to be maintained over the long term.
In response to a related question from Kim Nam-jun, a lawmaker from the Democratic Party of Korea, during a comprehensive parliamentary audit of the Bank of Korea by the National Assembly’s Finance and Economy Planning Committee that day, Shin said, “We estimate that the oil price cap prevented price increases from spreading to other areas and lowered inflation by 0.6 percentage points.”
However, he stressed, “The issue is sustainability. The question is how long it can last. South Korea’s fiscal position is relatively sound, so it has room to maintain the measure. Still, I don’t think it is a long-term policy.”
At a press conference held the previous day, Oct. 22, after the Monetary Policy Board meeting on the direction of monetary policy, Governor Shin also noted, “If it continues for a long time, it will create fiscal problems.”
Asked by Kim what factors the Bank of Korea considers important when making monetary policy decisions, including setting the benchmark interest rate, Shin replied, “Because of strong growth, core inflation next year is likely to be higher than the 2.5% we forecast at the end of August. We plan to conduct monetary policy accordingly.”
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Kim also said, “The market expects the terminal rate to be 3.5% or 3.75%. But what matters is not where the rate-hiking cycle ends; given the strong growth, we need to carefully assess the effects on each sector of the economy.” Shin replied, “We will examine that carefully.”
Bank of Korea Governor Shin Hyun-song answers lawmakers' questions during a comprehensive parliamentary audit of the Ministry of Planning and Budget, the Bank of Korea and other institutions at the National Assembly on Oct. 23, 2026. Photo by Yoon Dongju.
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