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| ▲ This photo, taken March 16, 2022, shows a dealing room at Hana Bank in Seoul. (Yonhap) |
Fed policy meeting-market
Fed's rate hike to have limited impact on financial market: official
SEOUL, March 17 (Yonhap) -- The U.S. central bank's decision to deliver its first rate hike since 2018 is expected to have a limited impact on South Korea's financial market as the move is in line with market expectations, a senior government official said Thursday.
The Federal Reserve on Wednesday (local time) raised the federal funds rates by a quarter percentage point to 0.25-0.5 percent to fight high inflation, after freezing borrowing costs at near zero since March 2020 to cushion the fallout of the COVID-19 pandemic.
The Fed also signaled more aggressive monetary tightening, projecting six additional rate hikes this year to bring the benchmark rate to about 1.9 percent by year-end.
First Vice Finance Minister Lee Eog-weon said the Fed's rate hike is expected to have a limited impact on South Korea's financial market, given reactions by global financial markets and Korea's economic fundamentals.
"But amid major central banks' continued efforts to tighten monetary policy, if Russia's default on its foreign debt is materialized, we cannot rule out the possibility that jitters about liquidity (shortages) could occur globally," Lee said at a meeting on macroeconomics.
The official said the finance ministry will actively cooperate with the Bank of Korea to take actions to stem potential hikes in bond yields.
Earlier in the day, Finance Minister Hong Nam-ki said the government will step up its efforts to stabilize the foreign exchange market if the won's weakness is deemed excessive.
The Korean won fell to end at the 1,240 level against the greenback for the first time in nearly two years Monday.
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