Why does Shin Hyun-song say the AI boom and Middle East conflict are raising inflation in Korea?

The AI boom is increasing demand for computing infrastructure and memory chips, while the prolonged Middle East conflict is adding inflationary pressure. Although the two trends affect economic activity in opposite directions, Shin said they combine to raise consumer prices.

How has Korea’s semiconductor boom affected its broader economy and income groups?

The semiconductor boom has driven exports and record profits at Samsung Electronics and SK hynix, but its gains have not fully spilled over into the wider economy. Shin described Korea as having a sharp K-shaped economy and said inflation hurts the lowest-income group most.

What interest-rate actions has the Bank of Korea taken to control inflation?

The BOK raised its benchmark rate to 3 percent through consecutive increases at its July and August meetings. It characterized the hikes as preemptive steps intended to prevent inflationary pressures from accelerating, with another rate-setting meeting scheduled for next week.

BOK chief stresses need to curb inflation amid AI boom, Mideast crisis

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Summary

Bank of Korea Gov. Shin Hyun-song said Wednesday in Bangkok that the global artificial intelligence investment boom and prolonged Middle East conflict are combining to raise inflation. He said AI-driven semiconductor demand is boosting Korea’s exports and chipmakers’ profits, while the benefits have not fully reached the broader economy. Shin warned that inflation hits the lowest-income people hardest and said appropriate monetary policy is essential.

Key Facts

Samsung Electronics Co. and SK hynix Inc. have reported record highs in profits and exports amid demand for memory chips used in AI computing infrastructure.
The BOK raised its benchmark interest rate to 3 percent through consecutive hikes at its July and August meetings.
The BOK has described the rate increases as preemptive measures to prevent inflationary pressures from accelerating further.
Inflation remains above the BOK’s 2 percent target, and the central bank’s next rate-setting meeting is scheduled for next week.

By Yonhap

Published Oct 14, 2026 5:20 pm KST

Bank of Korea Gov. Shin Hyun-song speaks during a parliamentary audit at the bank's headquarters in Seoul, Monday. Joint Press Corps

The chief of the Bank of Korea (BOK) on Wednesday stressed the importance of keeping inflation under control, saying the global artificial intelligence (AI) investment boom and the prolonged Middle East conflict are combining to push up consumer prices.

"Korea sits at the intersection of two of the most important trends right now. One is AI and the big investment boom, and the other one is the war in the Middle East," BOK Gov. Shin Hyun-song said during a CNN Global Perspectives session livestreamed online on the sidelines of the International Monetary Fund-World Bank Group (IMF-WBG) annual meetings in Bangkok, Thailand.

"In terms of activity, they pull in opposite directions. But the AI economy is swamping the negative effect of the war in the Middle East. But in terms of inflation, and this is relevant for the central bank, they are actually combining to raise inflation," he said.

Korea is at the forefront of the global AI boom, as demand for AI computing infrastructure has fueled demand for memory chips, driving exports and profits at the country's two major chipmakers, Samsung Electronics Co. and SK hynix Inc., to record highs.

However, export-driven growth has raised concerns that the benefits of the semiconductor boom have not fully spilled over into the broader economy, deepening economic polarization and contributing to what is known as a K-shaped economy.

"We do, in fact, have a pretty sharp case of a K-shaped economy," Shin said, adding that people in the lowest income group are hit hardest by inflation.

"I think the best thing from a central bank perspective is to just keep in mind that inflation hurts the lowest-income members of the population most," he said. "So this is why we need to get inflation down, and getting monetary policy right is absolutely key."

His remarks come as the BOK has tightened monetary policy to address inflationary pressures, with inflation remaining above its 2 percent target.

The central bank raised its benchmark interest rate to 3 percent through consecutive hikes at its July and August meetings, describing the moves as "preemptive" measures to prevent inflationary pressures from accelerating further.

The BOK will hold its next rate-setting meeting next week.

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