US Fed's rate hike schedule creates room for S. Korea's monetary policy: BOK chief

By Yonhap
  • Published : Dec 20, 2018 - 09:25
  • Updated : Dec 20, 2018 - 09:25

A slower rate hike schedule by the US Federal Reserve may give South Korea greater leeway in terms of setting monetary policy in the new year, the head of the country's central bank said Thursday.

On Wednesday (US time), the Fed raised its key interest rate for the fourth time this year to a range of 2.25 percent to 2.5 percent.


It also said it will raise the rate twice next year after reviewing global economic data and international financial markets.

"The rate hike and its scheduled adjustment have been widely expected," Bank of Korea Gov. Lee Ju-yeol told reporters.

"But a slower pace of US monetary tightening will help the central bank here operate its monetary policy in a more flexible manner."

He said the central bank will keep closer tabs on the US Fed's decisions in 2019 and do its best to minimize fallout from US monetary normalization.

Although the BOK raised its policy rate to 1.75 percent last month as part of efforts to curb massive household debt, the rate difference between South Korea and the United States has now widened to 0.75 percentage point.

A far wider rate spread may spark an outflow of foreign funds from the South Korean financial market. Currently, more than 30 percent of the market capitalization of South Korea's benchmark KOSPI bourse is owned by foreign investors. (Yonhap)