Bank of Korea Governor Signals Readiness to Raise Rates as Inflation Risks Mount

By Jihye Lee and Fabiana Negrin Ochoa

Bank of Korea Gov. Shin Hyun-song warned against falling behind the curve on taming inflation, signaling growing urgency for policymakers to act before it is too late.

With the Middle East conflict dragging on, concerns over inflationary pressures have increased, Shin said in a speech Friday marking the central bank's 76th anniversary.

The remarks will likely reinforce market expectations that the BOK will resume tightening as soon as next month, as the Iran crisis drives up energy prices and disrupts supply chains.

Central banks worldwide are grappling with the trade-offs of pre-emptively raising rates to ward off inflation, or holding on to preserve growth momentum in an increasingly uncertain environment. Several of the BOK's peers in Asia have already raised rates, as has the European Central Bank. Others, including the Federal Reserve, are in wait-and-see mode.