The Bank of Korea (BOK) should step up efforts to make more accurate assessments of current economic and financial situations ahead of next week's rate-setting meeting, the central bank's acting chief said Monday.
BOK Vice Gov. Lee Seung-heon, who is serving as acting chair of the central bank after Lee Ju-yeol left office last week, made the call in an internal meeting with senior officials, according to the bank.
The chief post is not expected to be filled until the rate-setting meeting scheduled for April 14 as Rhee Chang-yong, recently picked as the new governor, has to go through a parliamentary confirmation hearing.
"Upward pressure on inflation and downside risks on growth have increased due to such factors as the Ukraine crisis and surging commodity prices," acting governor Lee said. "Financial market volatility has also intensified as central banks in major countries have moved fast in their policy turnaround."
"With uncertainty remaining high at home and abroad like that, a monetary policy committee meeting is scheduled, posing more difficulty in making policy decisions. This requires more thorough analysis of current situations and reasonable projections."
Next week's rate-setting meeting comes after the BOK raised its key interest rate three times since August last year, including the latest 0.25 percentage point increase in January, to tamp down inflation.
It will also follow a rate hike decision by the US Federal Reserve last month, the first step of what appears to be a series of steep increases in borrowing costs.
The ongoing Russia-Ukraine war has sent oil and other commodity prices even higher, adding to upward pressure on inflation in South Korea that depends heavily on imports for such raw materials.
South Korea's consumer prices grew 3.7 percent on-year in February amid soaring energy costs. Inflation rose more than 3 percent for the fifth straight month, well above the central bank's inflation target of 2 percent.
Rhee, who is preparing for a confirmation hearing for the BOK chief post, earlier said that prices will likely grow faster than the central bank's prospect for a 3.1 percent rise during the first half but it is very hard to predict its trajectory in the latter half due to rising uncertainty. (Yonhap)