Bank of Korea Governor Nominee Shin Says Rate Near Neutral Level

0ljj8)sik007mqs9xubgpikq_media_dl_1.png The Bank of KoreaArticle content(Bloomberg) — South Korea’s central bank governor nominee Shin Hyun Song said the policy rate is broadly neutral based on a wide array of estimates, signaling no urgent need for a sharp shift in monetary policy.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentIn a written response to queries from lawmaker Chun Haram, Shin said the benchmark rate of 2.5% sits around the midpoint of estimates for Korea’s neutral rate, based on a range of studies conducted within and outside the Bank of Korea. He added that such estimates are subject to considerable uncertainty and should be assessed alongside broader financial conditions and policy effects.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle contentThe remarks suggest the incoming governor may take a measured approach to policy even as inflation risks rise and global uncertainty intensifies. Markets had speculated that Shin, a former Bank for International Settlements official, could lean toward a more hawkish stance given concerns over household debt and asset prices.Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentShin’s response to Chun, the Reform Party’s floor leader, came ahead of his parliamentary hearing on Wednesday. Shin was appointed last month by President Lee Jae Myung as the BOK’s next governor, and he’s expected to take office after Governor Rhee Chang Yong’s four-year term concludes next week.Article contentThe BOK last Friday kept its policy rate unchanged for a seventh straight meeting since July last year. The central bank said it’s premature to respond with policy adjustments given uncertainty surrounding the war in Iran. If the shock proves temporary, the board will refrain from adjusting rates, but if it becomes persistent, a policy response may be warranted.Article contentRead Also: Rhee to Leave BOK With More Guidance Tools and Transparency Article contentOn the currency, Shin said recent weakness in the won has been driven mainly by external factors, including rising oil prices and heightened risk aversion linked to tensions in the Middle East. He added that heavy foreign selling of local equities, partly reflecting portfolio rebalancing after strong gains in Korean stocks, has added to downward pressure on the won.Article contentArticle contentHe contrasted the recent moves with the sharp depreciation seen late last year, which was driven more by domestic factors such as outbound investment flows by residents, and uncertainties related to overseas investment. Article contentShin also pointed to South Korea’s high dependence on energy imports, noting that surging oil prices tend to worsen the nation’s terms of trade and amplify pressure on the currency.Article contentOn market stabilization, Shin said an expansion of currency hedging by the National Pension Service could help ease imbalances in the foreign-exchange market during periods of elevated volatility. He added that diversifying funding sources for overseas investment, including through foreign-currency bond issuance, could reduce demand for dollars and help limit upward pressure on the exchange rate.Article contentShin stressed that monetary policy should be assessed in a broader context, noting the considerable uncertainty surrounding neutral rate estimates. He said policymakers should take into account not only the neutral rate but also overall financial conditions and the effects of policy.Article contentTrending GFL Said to Near Deal to Buy Secure Waste for Over $4.3 Billion PMN Business Oil Tankers U-Turn in Hormuz as US-Iran Talks Break Down PMN Business Posthaste: More Canadians desperate for tax refund to plug holes in their finances News How the global energy crisis is shaking Canada from coast to coast — and could leave a lasting legacy Oil & Gas Trump's Blockade of Iran Ports Risks Expanding War to High Seas PMN Business Share this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. GFL Said to Near Deal to Buy Secure Waste for Over $4.3 Billion PMN Business Oil Tankers U-Turn in Hormuz as US-Iran Talks Break Down PMN Business Posthaste: More Canadians desperate for tax refund to plug holes in their finances News How the global energy crisis is shaking Canada from coast to coast — and could leave a lasting legacy Oil & Gas Trump's Blockade of Iran Ports Risks Expanding War to High Seas PMN Business