BOK governor says share price fall caused temporary dip in consumption after rate hold
In short
Bank of Korea Governor Shin Hyun-song said on 22 October that the recent fall in share prices is having some effect on the real economy, with a slight and temporary adjustment in consumption. He spoke after the central bank's Monetary Policy Board held the base rate at 3.00%. He also said the broader trend in consumption remains solid and that semiconductor prices are holding up.
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Bank of Korea Governor Shin Hyun-song (신현송) said on 22 October that the recent fall in share prices is having some effect on the real economy. Speaking at a press conference after the Monetary Policy Board held the base rate at 3.00%, he said, according to Korea Economic Daily, that share prices had recently been through a large correction and that he sees this as affecting the real economy to some extent. He added, "I judge that there is a slight consumption adjustment, temporarily, because of the recent share price decline." [ 4 , 5 , 6 ]
Newsis reported that Shin also said that, looking at the big picture, he sees consumption moving in a fairly solid direction. Asia Economy photo captions said the briefing took place at the Bank of Korea in Jung-gu, Seoul. [ 3 , 6 , 7 , 8 ]
On semiconductors, Korea Economic Daily quoted Shin as saying that, as he had said at the July policy meeting, it is important to look at the price of chips rather than share prices. He said long-term contracts and spot prices show prices holding at a fairly solid level. Newsis quoted him as saying chip prices are rising solidly, and that the spot index was at 45 dollars in early summer and has kept rising, with no sign of falling now. [ 4 , 6 ]
Newsis also reported Shin's comments on the oil price cap. He said the longer it lasts, the more distortion arises in the price structure, that consumption should be curbed but is not, and that there is a fiscal problem in the long run. He said the cap played a considerable part in holding down consumer prices despite unsettled oil prices, but that fiscal policy is hard to reverse once kept in place for long. [ 6 ]
A separate Newsis piece said brokerages are divided over the timing of the next rate rise, with one view that it resumes in November and another that it is delayed to early next year. According to that piece, experts mostly leaned toward an additional rise in November, citing solid export growth and demand-side inflation pressure, though external channels and financial stability variables could affect the cycle. The available text breaks off at that point. [ 3 ]
Why it matters
The governor's remarks link the recent stock market decline to household spending, while he describes the effect as temporary. Newsis separately reported that brokerages are split on whether the next rate rise comes in November or early next year.
Key facts
- The Bank of Korea's Monetary Policy Board held the base rate at 3.00% on 22 October. [ 3 , 4 , 6 ]
- Governor Shin Hyun-song (신현송) said the recent share price fall is having some effect on the real economy. [ 4 , 5 , 6 ]
- He said he judges there is a slight, temporary consumption adjustment because of the recent share price decline. [ 4 , 5 , 6 ]
- He said the broader trend in consumption is fairly solid, according to Newsis. [ 3 , 6 ]
- On semiconductors, he said price matters more than share prices and that prices remain at a fairly solid level. [ 4 , 6 ]
- The press conference was held at the Bank of Korea in Jung-gu, Seoul. [ 7 , 8 ]
Confirmed by several sources
- Shin Hyun-song said on 22 October that the recent share price fall has had some effect on the real economy and has caused a slight, temporary consumption adjustment. [ 4 , 5 , 6 ]
- The Bank of Korea held its base rate at 3.00% on 22 October, and the governor spoke at a press conference afterward. [ 3 , 4 , 6 ]
- Shin said semiconductor prices are holding at a fairly solid level. [ 4 , 6 ]
Still unclear
- When the next rate rise will come. Only Newsis reported brokerages are split between a November resumption and early next year, and the available text breaks off before the full argument.
- Shin's comments on the oil price cap and the spot semiconductor index. Only one outlet (Newsis) reported them; the other documents are headlines or do not include these remarks.
What local media are saying
Timeline, local time
- Yonhap publishes a flash headline on the governor's remarks. [ 1 ]
- Newsis publishes a flash report saying consumption is solid in the broader trend despite a temporary adjustment. [ 3 ]
- Korea Economic Daily publishes its report on the governor's remarks and the semiconductor price comments. [ 4 ]
- Newsis publishes a fuller report including comments on semiconductor prices and the oil price cap. [ 6 ]