S Korea-US rate hike

S Korea-US rate hike

S. Korea to raise guard against market instability after Fed rate hike

SEOUL, May 4 (Yonhap) -- South Korea's financial authorities said Thursday that they will remain vigilant against potential market instability after the U.S. Federal Reserve raised its policy rate again and opened the door for an additional rate hike.

Finance Minister Choo Kyung-ho, Bank of Korea (BOK) Gov. Rhee Chang-yong and other financial officials held a meeting to assess the impact of the Fed's rate increase.

"The government and the Bank of Korea will heighten the market monitoring system, and will closely check the financial soundness of our financial system and implement market stabilization measures swiftly if needed," the finance ministry and the BOK said in a statement.

The Fed raised its benchmark rate by a widely expected quarter-point to a 5 percent-5.25 percent range Wednesday (local time), possibly the last in its policy firming.

The Fed started its aggressive campaign of rate hikes in March last year to tame inflation.

After the rate hike, Fed Chair Jerome Powell left the door open for an additional rate increase if inflation remains higher than expected, dismissing a rate cut within this year.

The market players have been hoping that the Fed may cut borrowing costs within this year amid signs of a global economic slowdown and continued stress in the banking sector.

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