South Korean central bank governor nominee Shin Hyun-sung issued a dual warning: inflation pressures are rising, and "disorderly fluctuations" in the South Korean won are unacceptable.

The nominee for the Governor of the Bank of Korea, Shin Hyun-song, has warned that soaring oil prices and a weakening Korean won could push up inflation and drag down economic growth. This highlights the policy challenges he may face early in his term. During a parliamentary hearing on Wednesday, Shin Hyun-song stated that external uncertainties remain high, with ongoing tensions in the Middle East, rising global energy prices, and shifts in the policy paths of major economies posing key risks. Shin Hyun-song told lawmakers, "The situation in the Middle East remains serious, global oil prices are still significantly higher than before the conflict, and there are still risks in the global trade environment as well as the monetary and fiscal policies of major economies." "As a result, the domestic economy is facing increasing upward pressure on inflation and downward pressure on growth." He suggested that with the penetrating impact of high oil prices and a weak exchange rate on the economy, the relatively controlled price pressures in March may strengthen. Furthermore, despite strong semiconductor demand and supplementary budgets providing some support, economic growth is expected to be lower than previously anticipated. According to a report released earlier in the day by the Bank of Korea, import prices in March surged by 16.1% month-on-month due to the spike in oil prices, marking the largest increase in nearly thirty years. Nevertheless, Shin Hyun-song downplayed the possibility of stagflation. He pointed out that while inflation is likely to rise and growth may slow down, the risk of a long-term economic recession coexisting with high inflation remains limited. He also warned against excessive fluctuations in the exchange rate, stating that sharp or disorderly movements in the Korean won are unwelcome. "On the backdrop of increasing economic uncertainties, I will implement monetary policy in a manner that fulfills the core responsibility of the Bank of Korea to maintain price and financial stability, while supporting stable economic growth," said Shin Hyun-song. Addressing the market's description of him as a "pragmatic hawk," he disagreed with this characterization and added that such binary labels are not appropriate. Shin Hyun-song stated that if appointed, he will flexibly implement monetary policy to balance price stability and financial risks, while maintaining coordination with the fiscal authorities without compromising the central bank's independence.