Monetary Policy Committee Member Hwang Gunil: "Middle East Conflict Uncertainty Rises Significantly... Monetary Policy to Remain Cautiously Neutral for Now"

Message from the Bank of Korea's Monetary Policy Committee Member Overseeing the Monetary and Credit Policy Report

"Going forward, the paths of inflation and growth will be significantly influenced not only by changes in U.S. tariff policy, monetary and fiscal policies of major countries, and the semiconductor industry cycle, but also by the recently highlighted situation in the Middle East. It is necessary to closely monitor the development of geopolitical risks and their impact on the domestic economy."

Hwang Geonil, Member of the Monetary Policy Committee, Bank of Korea

Hwang Gunil, Monetary Policy Committee Member who oversaw the publication of the Bank of Korea's Monetary and Credit Policy Report on March 12, stated, "Since March, the rapidly changing external environment caused by conflicts in the Middle East has greatly increased uncertainty in the outlook and significantly heightened volatility in the financial and foreign exchange markets."

From a financial stability perspective, he explained that since interest rates and exchange rates are showing high volatility, deviating from economic fundamentals due to Middle East risks, it is necessary to actively respond through market stabilization measures if needed. He also noted the need to confirm whether the housing market is stabilizing on a structural level. Hwang pointed out, "Although the rise in housing prices has somewhat slowed, instability factors remain, including the spread of price increases to non-metropolitan areas. Therefore, we must continue to closely monitor whether the housing market is stabilizing in a sustained manner."

With regard to future monetary policy, he judged that rather than guiding expectations in a particular direction, it would be desirable to maintain a cautious and neutral stance for the time being while closely monitoring changes in internal and external conditions and economic indicators.

Meanwhile, Hwang also viewed that in a situation where domestic and external uncertainties are growing, it is necessary to expand communication and strengthen efforts to enhance dialogue with economic agents in order to improve the effectiveness of monetary policy. He emphasized, "To ensure that the new conditional interest rate outlook released through the February monetary policy direction becomes a useful communication tool regarding future monetary policy, we must continuously assess its effectiveness and consider constructive improvements."

Front view of the Bank of Korea, Jung-gu, Seoul. Bank of Korea

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