Seoul: Ryoo Sang-dai, senior deputy governor of the Bank of Korea (BOK), has indicated that it is time to consider a rate hike due to South Korea's better-than-expected economic growth in the first quarter. This statement comes despite ongoing economic uncertainties caused by the conflict in Iran.

According to Yonhap News Agency, Ryoo made these remarks while attending an annual meeting of the Asian Development Bank in Samarkand, Uzbekistan. He mentioned that although the central bank previously held the key rate in April, noting potential impacts of the war on growth and inflation forecasts, current economic indicators suggest a different trajectory. Economic growth has not fallen much below 2 percent, and inflation could exceed 2.2 percent, leading Ryoo to propose reconsidering rate cuts in favor of potential rate hikes.

This is the first time a member of the BOK's seven-member monetary policy board has suggested a rate hike. Last month, the central bank maintained the key interest rate at 2.5 percent for the seventh consecutive session, amid Middle East uncertainties and risks to inflation, currency, and growth. South Korea's economy expanded by 1.7 percent in the first quarter from the previous three months, marking the fastest quarterly growth in over five years, largely due to strong semiconductor exports. The BOK had initially projected a growth of 0.9 percent.

Ryoo also noted that the semiconductor boom is bolstering the export-driven economy, despite sustained inflationary pressures. The government has implemented measures such as nationwide fuel price caps to curb consumer prices. The BOK's next monetary policy meeting is scheduled for May 28 and will be the first chaired by new BOK Governor Shin Hyun-song, who assumed office last month.