BOK governor says consecutive rate hikes bought time to avert financial turmoil

During a parliamentary audit in Seoul, Bank of Korea Governor Shin Hyun-song said the July and August rate increases to 3% were intended to buy time for the central bank to act against possible financial instability. He argued that moving ahead of other major economies and acting swiftly, as a Korean proverb suggests, sent a clear signal that helped keep Korean government-bond yields steady. While acknowledging that higher rates cause short-term pain, Shin maintained that pre-emptive action reduces overall market costs.

He also highlighted the challenge of compiling precise data on overseas AI subscription fees and promised to refine the statistics. In a report to the National Assembly, the BOK lifted its growth forecasts to 3.3% for 2026 and 2.9% for 2027, driven by a robust semiconductor export cycle spilling over into broader economic activity. The bank said it will monitor inflation, which remains above the 2% target, and consider further policy adjustments at its next meeting on Oct. 22.