▲ Finance Minister Choo Kyung-ho (2nd from R) speaks during a meeting in Seoul on June 15, 2023, in this photo released by the Ministry of Economy and Finance. (PHOTO NOT FOR SALE) (Yonhap)

(LEAD) S Korea-US rate hike

(LEAD) S. Korea to closely monitor financial market over U.S. rate freeze: Choo

(ATTN: UPDATES with more details in last 4 paras)

By Kang Yoon-seung

SEJONG, June 15 (Yonhap) -- South Korea will continue to closely monitor the financial market amid lingering uncertainties in the monetary policies of major countries, the finance minister said Thursday, hours after the U.S. central bank decided to freeze its key rate after 15 months of hikes.

The U.S. Federal Reserve held its benchmark rate at a 5 percent-5.25 percent range Wednesday (local time), after carrying out 10 consecutive hikes since March last year.

The Fed, however, hinted that it may raise the key rate further later this year, noting it "remains highly attentive to inflation risks."

"The decision by the FOMC did not deviate significantly from the government and the market's expectations," Finance Minister Choo Kyung-ho said during a meeting with economy-related ministers, referring to the Federal Open Market Committee.

"However, given the existing uncertainties surrounding the monetary policies of major countries, including the U.S., the government remains committed to maintaining a vigilant approach, and closely monitoring both domestic and global financial markets."

In May, the Bank of Korea held the benchmark interest rate steady for the third straight time at 3.5 percent on easing inflationary pressure amid rising concerns over an economic slowdown. The South Korean central bank had delivered seven consecutive hikes in borrowing costs from April 2022 to January 2023.

Choo said the South Korean financial market remains stable.

"On the back of improved sentiment for the chip industry, coupled with foreign buying, the main stock index surpassed the 2,600 mark for the first time in approximately a year," Choo said, adding the foreign exchange market also remains steady.

The previous day, the benchmark Korea Composite Stock Price Index (KOSPI) lost 18.87 points, or 0.72 percent, to close at 2,619.08.

"The government will further solidify the stability of the domestic financial market and thoroughly address potential risks as well," he added.

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