Bank of Korea Deputy Governor: Rate Hikes Likely to Continue Unless Major Shock Occurs
Claire Weston
Bank of Korea Senior Deputy Governor Ryoo Sang-dai said further rate hikes are 'highly likely' barring an 'extraordinary shock' — the most explicit endorsement yet of the BOK's tightening path, signaling markets should prepare for consecutive hikes.
What exactly did he say?
Ryoo said Tuesday that rate policy is forward-looking and preemptive; given the growth and inflation outlook, "there will be further rate hikes."
He is one of seven members on the BOK's monetary policy board. His three-year term ends August 20.
This means → a senior policymaker about to leave office chose to spell out the direction this clearly — effectively setting the tone for the entire board.
Why can Korea's economy handle more hikes?
The BOK raised rates last month for the first time in three and a half years, citing strong growth driven by surging chip exports amid the global AI boom.
Q2 GDP beat expectations, extending Q1's run as the strongest single-quarter growth in nearly six years.
In plain terms = chips are selling well, the economy is growing fast, and the central bank has the confidence to tighten without fearing it will choke off growth.
Inflation is falling — why keep hiking?
July inflation dropped to a three-month low, below market expectations, mainly on lower oil prices.
But Ryoo said the BOK is focused on demand-pull inflation, not supply-side shocks from the Middle East conflict.
This means → the bank is looking past short-term oil swings at the gradual, persistent price pressure from domestic recovery — pressure that won't vanish because one month's data looks tame.
What role does the won play?
The won sits around 1,400 per dollar, a level Ryoo called "very high," exerting significant upward pressure on inflation.
He sees the dollar-won rate unlikely to fall quickly — some temporary factors persist — but the broader trend points toward further won appreciation.
In plain terms = a weak won makes imports more expensive, which itself pushes prices higher — giving the BOK an extra reason to hike.
What to watch at the August meeting?
Ryoo said if he attends the August 27 policy meeting, he will focus on export data and credit-card spending to inform his decision.
Recent won appreciation and equity-market volatility deserve attention but are not yet primary drivers of the policy decision.
He offered no specific guidance on the pace or size of future hikes — this reflects the BOK keeping its options open, even as the direction is locked in.
Content is for reference only, not financial advice.