The Bank of Korea Monetary Policy Committee on the 28th said it will continue to
maintain a tightening stance after announcing the first rate hike in
three-and-a-half years. The committee said exports and investment—supported by a
strong semiconductor cycle—should keep growth robust and that inflation is
likely to remain above target for an extended period, with this year’s GDP
growth now expected to be materially higher than the May forecast of 2.6%. It
also flagged rising financial-stability risks: won-dollar volatility has
widened, housing-related and other loans have risen in tandem, driving a sharp
increase in household credit and a further firming of Seoul-area house prices.
On balance, the committee judged it necessary to maintain a policy tightening
stance.
