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

By Yonhap

Published : March 23, 2023 - 09:23

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Finance Minister Choo Kyung-ho (second from left), who doubles as the deputy prime minister for economic affairs, speaks during an emergency meeting on macroeconomic situations at the government complex in Seoul on Thursday (Yonhap) Finance Minister Choo Kyung-ho (second from left), who doubles as the deputy prime minister for economic affairs, speaks during an emergency meeting on macroeconomic situations at the government complex in Seoul on Thursday (Yonhap)

South Korea's chief economic policymaker warned Thursday of the possibility of further instability in the global financial market, such as a recent bank turmoil sparked by the failure of American lenders, amid the continued monetary tightening moves by the United States and major economies.

Finance Minister Choo Kyung-ho made the assessment during an emergency meeting on the macroeconomic situation, which was also attended by Bank of Korea Gov. Rhee Chang-yong and other officials.

On Wednesday, the Federal Reserve raised the rate by 25 basis points to a range of 4.75 percent to 5 percent, the highest level since September 2007. It was the ninth rate hike in a row.

During a press conference following the rate-setting meeting, Fed Chair Jerome Powell dismissed any rate cuts this year, stressing its commitment to restoring price stability.

"We cannot rule out the possibility of the recurrence of instability in the global financial market, such as the recent crisis facing smaller US banks as the global economy has been adapting to aggressive monetary tightening," Choo said.

The government and the Bank of Korea will maintain a round-the-clock market monitoring system on a real-time basis, and will closely check the financial soundness of our financial system and related companies, the minister said, vowing to "implement market stabilization measures swiftly if needed." (Yonhap)