KONTAN.CO.ID - SEOUL. The chief of South Korea's central bank sees the increasing threat of inflation taking hold in Asia's fourth largest economy, he said on Thursday, leaving the door open for an interest rate hike as early as January. The central bank's board needs more time to properly assess the economic impact of the latest social distancing curbs, but there is no change in plans to gradually normalise monetary policy, Governor Lee Ju-yeol said. "We still see inflation at 2% for next year, but upside risks seem bigger, hence we described our outlook as 2%-range," Lee told a news conference after releasing a bi-annual report on inflation.
"Basically I made it clear that monetary policies will be normalised and there's no change to that plan," Lee said, when asked if the benchmark rate could be raised at the bank's next review meeting on Jan. 14. Read Also: Indonesia Reports First Case of Omicron Variant Last month, the Bank of Korea raised its inflation outlook for next year to 2% from 1.5% earlier, as it raised interest rates for the second time since the beginning of the pandemic, to rein in price pressure. Lee has previously said another rate hike is possible in the first quarter of next year as the bank keeps up its withdrawal of massive monetary stimulus adopted when the pandemic hit activity last year.