Bank of Korea (BOK) Governor Rhee Chang-yong said Thursday the country needs to maintain a restrictive monetary policy for an extended period to combat inflation. Rhee indicated that the BOK’s restrictive stance would continue while monitoring monetary policy and financial stability data from major countries. He warned that a premature rate cut could increase property prices, potentially derailing economic stability.

The South Korean economy has shown signs of recovery, growing slightly after a 0.3% contraction in Q4 2022, driven by rising exports. However, private consumption remains sluggish, affected by global monetary tightening, geopolitical tensions, increasing household debt and China’s economic slowdown. The BOK has kept its key rate steady for eight sessions following seven consecutive hikes from April 2022 to Jan. 2023.