BOK Monetary Policy Board Member Lee Soo-hyung Signals Interest Rate Decision Amid High Oil, High Exchange Rate Trends

Lee Soo-hyung, a member of the Bank of Korea's Monetary Policy Board, stated Tuesday morning that rising oil prices and exchange rates stemming from the Middle East conflict could exert upward pressure on inflation. Speaking at a press briefing held at the Bank of Korea annex in Jung-gu, Seoul, Lee emphasized the need to assess the ripple effects on the overall domestic economy from energy supply and demand issues and oil price volatility caused by the Middle East situation.

Lee stated that future monetary policy decisions might differ from previous forecasts, noting significant uncertainty surrounding the interplay between supply-side inflationary pressures and demand-side growth slowdown pressures. He highlighted that the persistence of price increases driven by energy supply and demand imbalances is a key variable for policy judgment. Lee indicated his stance is to carefully scrutinize these trends before determining the future direction of monetary policy.

He attributed recent increases in exchange rate volatility to imbalances in foreign exchange supply and demand, as well as psychological factors like the 'short cycle' phenomenon. Lee diagnosed that while current exchange rate volatility is high compared to other countries, it is not due to structural weaknesses such as current account deficits or dollar liquidity shortages. Considering factors like the semiconductor cycle, the current account is expected to show a robust trend.

However, given that the Middle East situation was not factored into the economic outlook in February, Lee signaled the possibility of revising monetary policy judgments in response to changes in external conditions.