BOK chief says inflation could stay around 5% through H1 2023, warrants rate hikes

SEOUL -South Korea's central bank governor Rhee Chang-yong on Friday said country's headline inflation is likely to stay around 5 per cent through the first half of next year, which would warrant further increases in interest rates.

"Inflation in the 5 per cent range could continue through the first half of next year," Rhee said, responding to a question at a parliament session in Seoul.

"We look at supply and demand (inflationary pressures) but interest rates should increase should inflation stay above 5 per cent."

Expectations are increasing among analysts for a 50 basis point hike in the key interest rate to 3.00 per cent when the Bank of Korea reviews policy at its Oct. 12 meeting.

Rhee has kept the door open for a continued tightening through the first half of next year, and analysts have predicted the base rate would peak at 3.50 per cent in the first quarter of 2023.