The article explores how changes in interest rates affect prices in Korea. Before the currency crisis, monetary policy had a cost channel effect on prices. A model was developed to show this effect, with a focus on the banking sector's role. Since the crisis in 1997, the impact of monetary policy on prices has decreased due to slower price adjustments by firms and lower capital adjustment costs. However, when the banking sector efficiently provides loans, monetary policy can still influence the economy through changes in demand, helping to stabilize prices.