BoK Governor Rhee says growth path to hinge on the Middle East and trade conditions, adds board members are in wait-and-see mode as Middle East conflict situation is too volatile

Says:

• It is too early to judge the direction of the Middle East shock, stating that a temporary shock does not warrant a rate response, although a prolonged shock may require a policy response.
• Iran war has a bigger impact on inflation and growth outlook in South Korea than the war in Ukraine.
• To assess the size and duration of the Middle East war impact.
• Too early to discuss a rate hike amid Middle East volatility.
• Board needs to watch the course of Middle East negotiations first.
• Asian economies more vulnerable to supply-side impact from Iran war compared to European economies.
• Exports are better than expected.
• Impact of extra budget being planned will be affected in the BoK's May revision of forecasts.
• National Pension Service overseas investment is being planned for some cuts.
• World Government Bond Index inclusion is to bring in foreign inflow to South Korea.
• Recent introduction of dotplot forward guidance is positive for policy transparency, adds whether or not BoK's dotplot would continue as a policy tool will be determined by the incoming governor.