BOK chief says stock decline causing temporary consumption dip, but long-term outlook solid

Bank of Korea Governor Shin Hyun-song said the recent decline in share prices is causing a temporary pullback in consumption, but added that spending remains on a solid long-term trajectory.

"Share prices have undergone significant correction recently, and we see that affecting the real economy as well," Shin said at a monetary policy press conference Thursday morning. "But looking at the longer term, income conditions continue to improve through exports and investment, and in the broad sweep of things, consumption is moving on a fairly solid path."

On the government's oil price cap — in place for seven months since the Iran war — Shin said the measure had played a significant role in keeping consumer prices in check even amid price instability, but cautioned that the longer it remains in effect, the greater the risk of distortions in the price structure, with fiscal implications over time. He went on to say he believed the government was well aware of this and was clearly thinking about an exit strategy.