Economist Predicts Potential Shift in South Korea's Monetary Policy Amid Rising Oil Prices

Economist Jin-Wook Kim from Citigroup has indicated that a rise in oil prices could push South Korea's inflation rate above 3%, widening the gap with the Bank of Korea's 2% target. According to Jin10, Kim's report suggests that if the inflation gap exceeds 1 percentage point and persists, the Bank of Korea may begin to incrementally raise interest rates by 25 basis points. Furthermore, if the gap surpasses 2 percentage points, the central bank might adopt a more aggressive tightening approach, potentially increasing rates by 50 basis points at each meeting, prioritizing price stability over growth. South Korea's inflation rate remained at 2% in February, but escalating tensions in Iran and rising oil prices could drive inflation higher in the coming months.