Bank of Korea chief says early rate hikes helped contain financial risks

Bank of Korea Governor Shin Hyun-song told a parliamentary audit on Oct. 12 that consecutive interest-rate increases had given authorities more time to respond to financial risks.

The central bank raised its benchmark rate in July and August, taking it to 3 percent. Shin said the early tightening had sent a strong market signal and that government bond yields had remained relatively stable over the past two to three weeks. He acknowledged that higher rates cause pain but argued that acting early reduces the eventual cost of stabilizing markets.

Shin also promised work on more detailed statistics for overseas artificial intelligence subscriptions. South Korea recorded a $6.4 billion intellectual property services deficit in the first half, including $8.9 billion in software copyright payments. AI subscriptions are counted within those payments, but the existing data do not isolate them.

The comments came ahead of the bank's next rate-setting meeting on Oct. 22. They explain the governor's assessment of earlier decisions and do not announce a new rate increase.