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| ▲ A signboard at a dealing room of Hana Bank in Seoul shows that the KOSPI benchmark stock index closed 1.25 percent lower at 2,975.71 on Nov. 3, 2021. (Yonhap) |
Fed meeting-financial markets
Fed's tapering to have limited impact on S. Korean market: official
SEOUL, Nov. 4 (Yonhap) -- The U.S. Federal Reserve's latest decision to start to taper its bond purchases is expected to have limited impacts on the South Korean financial markets as the move was widely anticipated, a senior government official said Thursday.
First Vice Finance Minister Lee Eog-weon said the government plans to take measures to stabilize the market, if needed, as market volatility could increase due to global inflation risk and uncertainty about major economies' monetary policy stance.
At the latest policy meeting, the Federal Reserve on Wednesday (local time) froze the key interest rate steady near zero but said it will start to taper its massive asset purchases later this month amid the economic recovery.
At a news conference, Fed Chair Jerome Powell said the U.S. central bank would be "patient" before hiking the benchmark interest rate.
"If global inflation anchors longer than expected, it could cause market uneasiness due to uncertainty about the pace of the global economic recovery, and major economies' monetary policy directions," Lee said at a meeting on macroeconomics.
He said the government will keep close tabs on progress of the Fed's tapering and global economic situations.
Lee also said the finance ministry will buy back 2 trillion won (US$1.7 billion) worth of government bonds Friday in a bid to help ease the bond market.
The country's bond market rattled in recent sessions as the yield of three-year government bonds topped 2 percent for the first time in three years last week amid global inflation risks and uncertainty about the Fed's tapering of stimulus measures.
The return on three-year state bonds added 0.5 basis point to 2.108 percent Monday, the highest since August 2018. Bond prices move inversely to yields.
But bond prices rebounded after the government on Tuesday unveiled a plan to buy back state bonds to ease market volatility.
The Bank of Korea is widely expected to raise its key interest rate in November to tame inflation and curb household debt.
South Korea's central bank froze the benchmark rate at 0.75 percent last month after raising it from a record low of 0.5 percent in August.
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