Bank of Korea Governor Lee Chang yong stated on Monday that due to the increasing uncertainty of inflation, the bank needs to maintain its restrictive monetary policy for a considerable period of time.
On the same day, Lee Changyong stated in the South Korean parliament: "Due to the conflict between Israel and Hamas, the volatility of international oil prices and exchange rates has intensified, and the consumer price inflation rate is expected to decrease, but still above the target of 2%
At this month's policy meeting, the Bank of Korea kept its key interest rate unchanged at 3.5% for the sixth consecutive time, due to slowing economic growth and increased uncertainty.
The bank stated that the weakening of demand pressure, coupled with the stabilization of agricultural product prices, will help slow inflation, but the conflict between Palestine and Israel may slow down the pace of inflation slowdown.
Driven by the rise in oil prices and some agricultural product prices, South Korea's Consumer Price Index (CPI) rose 3.7% year-on-year in September, the fastest in five months.
The Bank of Korea predicts that inflation pressure will continue to increase in the future, with inflation rates expected to remain above 3% around the end of the year, far above the target of 2%.
The bank expects South Korea's inflation rate to be 3.5% for the entire year.