The Bank of Korea expects inflation to remain above the target level until next year.

The Bank of Korea said on Wednesday that although negotiations to end the war between the US and Iran have made progress, inflation is expected to remain above its target level until next year due to continuing price pressures. The Bank of Korea said, "Looking ahead, inflation is expected to remain high for a considerable period of time. Although oil prices are expected to gradually decrease as tensions ease, the cost pressures from high oil prices and exchange rates are expected to transmit to other products." The Bank of Korea said in its semi-annual inflation target policy report that due to increasing demand-side pressures from wage growth, consumer inflation will remain around 3% in the second half of this year and is expected to continue to exceed the Bank's 2% medium-term target next year. The Bank's outlook further strengthens the rationale for tightening monetary policy as early as next month. Consumer inflation rose to a new high of 3.1% in May, the highest in over two years, due to the impact of rising oil prices from the conflict in the Middle East.