Remarks at the People Power Party's Price and Livelihood Stabilization Special Committee Meeting Held at the National Assembly on the Morning of the 28th
[Asia Economy Reporter Kum Boryeong] Lee Seungheon, Deputy Governor of the Bank of Korea, expressed on the 28th that regarding the overall domestic inflation trend, "the upside risks are generally significant," and that monetary policy should be operated with a focus on inflation until the upward trend is broken.
Deputy Governor Lee attended the People Power Party's Price and Livelihood Stability Special Committee meeting held at the National Assembly that morning and stated, "Consumer prices are rising very rapidly. In May, the consumer price inflation rate rose to 5.4%, entering the 5% range for the first time in two months. The core inflation rate, excluding food and energy, is also expected to continue rising."
He continued, "Electricity, gas, and water charges are also increasing, and there is an upward trend in personal services centered on dining out," explaining, "Both overseas supply factors and domestic demand-side factors are operating simultaneously."
He also said, "Since the inflation rate is taken as the basis for wage increases, it will be reflected with a one-year lag," adding, "If wage increases become larger, the personal services sector, which accounts for labor costs, will rise, and although currently limited, this could cause another problem."
Furthermore, Deputy Governor Lee stated, "Considering changes in conditions such as the expanded rise in international oil prices, the future inflation trend is expected to exceed the path forecasted in May," and "There are forecasts that the June consumer price inflation will exceed 6%, which is expected to be much higher than May's 5.4%."
Regarding monetary policy, he said, "With interest rate hikes centered on the United States and the issue of a global economic downturn, there is a possibility that growth slowdown and inflation will intensify as we move into the second half of the year," emphasizing, "We need to respond flexibly by looking at economic indicators and data, but at this stage, since controlling the inflation rise is a priority, I think it is desirable to conduct monetary policy focused on inflation until this upward trend changes."
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