Key insights
- The nominee for Bank of Korea governor stated a flexible monetary policy is needed due to risks from the Iran war. While focusing on the Korean economy, geopolitical instability and potential inflationary pressures could indirectly influence global market sentiment and risk appetite, leading to minor bearish implications for US equities.
SEOUL, March 31 (Reuters) - Shin Hyun-song, nominee for the governor of Bank of Korea, said on Tuesday that the central bank needs "flexible" monetary policy to deal with rising risks from the Iran war.
Shin said at a meeting with reporters that the current level of the Korean won was not concerning and that liquidity was good. The currency hit the weakest level against the U.S. dollar since March 2009 in Seoul trading.
Shin said he sees the crisis in the Middle East as the biggest risk to the Korean economy. The government’s plan for an extra budget is needed for low-income people hit by financial difficulties due to the Iran war, he said.
Inflationary pressure from the extra budget would be limited, he added, given the design and the scale of the plan.
Shin, head of economic department at the Bank of International Settlements (BIS), was appointed last week by President Lee Jae Myung as nominee to lead the central bank. He will go through a hearing at the parliament before taking office.