Inflation likely to slow down as market volatility grows: BOK Chief

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Inflation likely to slow down as market volatility grows: BOK Chief

Published: 09 Jul. 2024, 17:55

SARAH CHEA
chea.sarah@joongang.co.kr

The chief of the Korean central bank said Tuesday the country is expected to see a gradual easing of inflation, while market volatility grows amid high interest rates and political uncertainties in major nations.

Bank of Korea (BOK) Gov. Rhee Chang-yong made the assessment during a parliamentary session, noting that the BOK will fully consider the disinflation trend and how to pursue the conflicting goals of growth and financial stability during an upcoming rate-setting meeting.

"The price easing could temporarily slow down due to oil prices, but the overall trend of disinflation is likely to continue," Rhee said.

Consumer prices rose 2.4 percent on year in June, the lowest level since July 2023, and officials have said the country is projected to reach a target rate of 2 percent by the end of this year.

Speaking of the financial sector, Rhee said the overall financial system remains stable, but the credit delinquency rate has been rising due to the weak real estate project financing field and heavy burdens on vulnerable people.

"Housing prices have risen in the capital area, and the growth of household debt has accelerated," Rhee said. "Volatility in the foreign exchange market has also grown amid the possibility of prolonged high interest rates in the United States and political uncertainties in major economies."

The central bank will fully consider these factors during the rate-setting meeting of its monetary policy board slated for Thursday, the chief added.

In May, the BOK froze its key rate for the 11th straight session at 3.5 percent.

Yonhap