US rate cut to have positive impact on S. Korean economy: BOK official

By Jung Min-kyung
  • Published : Oct 31, 2019 - 15:13
  • Updated : Oct 31, 2019 - 16:56

Regarding the US Federal Reserve’s latest decision to cut interest rates, South Korea’s central bank on Thursday said the move will have a positive impact on the local economy, though other factors will be considered for its own rate cut decision.

“On the principle that a US rate cut leads to a rise in stock prices and interest rate cuts, the latest decision is expected to contribute to growth in the global economy,” Yoon Myun-shik, senior deputy governor of the Bank of Korea, told reporters after a meeting at the bank’s headquarters in central Seoul. 

Bank of Korea Senior Deputy Gov. Yoon Myun-shik speaks to reporters at the headquarters of the South Korean central bank in Seoul on Thursday. (Yonhap)

“It is also likely to bring some positive effects to our economy,” he added.

On Thursday, the US central bank cut interest rates for the third time this year, by 0.25 percent to between 1.5 percent and 1.75 percent, amid a slowing global economy. Federal Reserve Chairman Jerome Powell also strongly suggested that the rates would remain steady for the time-being.

On the rate cut affecting South Korea’s monetary policy, Yoon said it “could alleviate some concerns surrounding issues such as a capital outflow.”

Experts have voiced concerns of a possible capital outflow after the BOK cut its key rate in July, widening the gap between its own rate and that of the US to a maximum 1 percentage point at the time.

Earlier this month, the BOK had further slashed the key rate to all-time low of 1.25 percent.

But overall, Yoon noted that the latest rate cut is one of many factors to consider in the BOK’s decision-making process. The Fed decision itself is not likely to change the BOK’s cautious stance toward a further rate cut, he explained.