S Korea-US rate hike
S. Korea to monitor volatility in finance sector amid Fed's rate hike
By Kang Yoon-seung
SEOUL, July 27 (Yonhap) -- Finance Minister Choo Kyung-ho said Thursday he will closely monitor potential volatility in the financial sector following the latest U.S. Federal Reserve rate hike, which pushed the gap between the two countries' key rates to an all-time high.
The Fed raised its benchmark lending rate by a quarter percentage point Wednesday (local time), sending it to the highest level since 2001.
"The decision by the FOMC did not deviate from the market's expectations, with the global financial market remaining stable in general overnight," Choo said during an early morning meeting.
"But the government will continue to remain vigilant, as there are still uncertainties in the future monetary policies of the U.S. and other major countries," he added.
The latest hike, meanwhile, sent the key rate to a range between 5.25 percent and 5.5 percent in the world's largest economy, with the gap between the allies now at an all-time high of 1.75-2.0 percentage points.
South Korea's central bank kept its benchmark rate frozen at 3.5 percent earlier this month.
"Regarding the inflow and outflow of capital, as well as the foreign exchange market, it is widely recognized that they are influenced not only by the interest rate gap but also by the economic and financial conditions at home and abroad," Choo added.
He also emphasized that the South Korean financial market has maintained stability even amid the increased rate gap with the U.S.
The finance minister, however, said the government and the central bank will continue to work together and implement a "contingency plan" if necessary.
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