▲ This EPA handout photo made available by the Royal Thai Navy shows the Thai-flagged cargo ship Mayuree Naree on fire after being hit by Iranian missiles in the Strait of Hormuz on March 11, 2026. (PHOTO NOT FOR SALE) (Yonhap)

BOK-monetary policy

BOK to maintain cautious monetary stance amid uncertainties over Middle East crisis

SEOUL, March 12 (Yonhap) -- The central bank said Thursday it would maintain a cautious stance in conducting monetary policy in light of heightened economic and financial uncertainties due to the Middle East conflict.

"The economic outlook has become more uncertain since March due to rapidly changing external conditions stemming from the Middle East conflict, while volatility in the financial and foreign exchange markets has also increased significantly," the Bank of Korea (BOK) said in its biannual monetary policy report released earlier in the day.

"It would be desirable to maintain a prudent and neutral policy stance for now, rather than forming expectations toward a specific policy direction, while closely monitoring changes in domestic and external conditions, and key economic indicators," it noted.

The BOK kept its benchmark interest rate steady at 2.5 percent in its latest rate-setting meeting held late last month, marking the sixth consecutive on-hold decision, as it sought to ensure financial stability amid a weak local currency and an unstable housing market despite stronger-than-expected growth momentum.

"The Middle East conflict could have a significant impact on future policy decisions. But it is still too early to assess its impact given heightened uncertainties," BOK Deputy Gov. Park Jong-woo told a press briefing.

"We will examine the effects of the conflict on growth and inflation before making decisions at the April monetary policy meeting," he added.

As for prices, the BOK said global inflation could face renewed upward pressure from a range of demand- and supply-side factors, including higher oil prices amid the Middle East crisis, expanding investment in artificial intelligence (AI), stronger-than-expected global economic growth and the United States' tariff policies.

"A 1 percentage point increase in global inflation could raise consumer prices in South Korea by about 0.2 percentage point," the report said.

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