Following the U.S. Federal Reserve′s monetary
meeting this week,… the Bank of Korea′s chief says external economic uncertainties
have gotten bigger. The governor says the pace of a possible rate
increase in the U.S. is more crucial than when it will start the hike.
Shin Se-min reports. Bank of Korea Governor Lee Ju-yeol says that
the pace of the rate increase by the U.S. Federal Reserve is more crucial than when
it starts. During a meeting with local commercial bankers
on Friday,… the governor said that although the timing of the rate hike is important,…
he said “more attention will be on the pace of the increase,” as it will continue to rise
once it starts. The top central banker′s comment follows
the Fed′s latest indication that it′s open to a possible interest rate rise on the
back of improving jobs growth,… moving it a step closer to increasing the rate for the
first time in nine years. Regarding this, the central banker said economic
uncertainty in Korea still exists,… adding that it is difficult to predict when the Fed
will begin to raise its rates. The BOK last week cut the country′s interest
rate to a historical low of 1-point-7-5-percent to help boost the sluggish Korean economy.
Some experts in Korea believe the country will maintain its key expansionary policy
for now, because tightening moves like a rate increase by the Fed also indicate possible
changes in the global financial market. A U.S. rate hike could trigger a major capital
outflow from Korea,… as the investments already made in developing economies could
flow into the U.S. market,… eventually forcing the BOK to raise the rate.
Experts here say that major economies like Europe and Japan, with their continued monetary
easing measures, should work as a buffer for the Korean economy,… even if a sizable amount
of money makes its way to the U.S. Shin Se-min, Arirang News.