Bank of Korea (BOK) Gov. Rhee Chang-yong attends a press conference at the central bank's headquarters in Seoul on Dec. 20, 2022, in this photo released by the bank. Yonhap

Bank of Korea (BOK) Gov. Rhee Chang-yong on Sunday underlined the need for the central bank to place a focus on price stability in executing its monetary policy this year.

"As inflation, which is most important to people's livelihoods, is expected to stay over the midterm target range, we will continue our monetary policy this year with a focus placed on price stability," Rhee said in his New Year's Day message.

Korea's consumer prices, a major gauge of inflation, jumped 5.1 percent on-year in 2022, the fastest on-year rise since 1998, when the country was in the midst of the Asian financial crisis. It is much higher than the central bank's medium inflation target range of 2 percent.

The BOK has hiked its benchmark interest rate by a combined 2.75 percentage points since August 2021 to bring inflation down. The hawkish monetary stance has been in line with aggressive rate increases in major countries, including the United States.

Rhee worried that the full-fledged impact of those rate increases on the overall economy could materialize going forward. He also voiced concerns over financial market volatility that could be driven by the trajectory of monetary policy in the U.S. and other major economies.

With regard to the country's widening trade deficit, Rhee said things could rebound fast as soon as external market conditions recover as major product sales except semiconductors remain robust. (Yonhap)