Concerns Over Widening Korea-US Interest Rate Gap, Choo Kyung-ho Says "Foreign Currency Funding Market Is Stable"

Emergency Macroeconomic and Financial Meeting Held on the 27th

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho is delivering opening remarks at the Emergency Macroeconomic and Financial Meeting held at the Bankers' Hall in Jung-gu, Seoul on the 27th. Photo by Kang Jin-hyung aymsdream@

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho stated on the 27th regarding the U.S. Federal Reserve's policy interest rate hike, "Although there are concerns about uncertainty due to the widening interest rate gap, the foreign currency fund market remains stable," and added, "The government will implement market stabilization measures if necessary."

At an emergency macroeconomic and financial meeting held at the Seoul Banking Hall on the same day, Deputy Prime Minister Choo explained, "The U.S. Federal Reserve decided at the overnight FOMC (Federal Open Market Committee) meeting to raise the policy interest rate by 0.25 percentage points, expanding the domestic-foreign interest rate gap to 2.00 percentage points, which has raised some concerns about increased uncertainty."

He further explained, "However, in the case of capital inflows and outflows and exchange rate fluctuations, it is generally assessed that these are influenced not only by the domestic-foreign interest rate gap but also by domestic economic and financial conditions as well as global economic and financial environments." He added, "Even considering recent circumstances, despite the outlook for a widening interest rate gap, foreign investment funds have continued to show a net inflow of over 22 trillion won this year." He also said, "The exchange rate is showing stability, reflecting the trends in major currencies, and the foreign currency fund market is also in a favorable condition."

Deputy Prime Minister Choo stated, "Since domestic and international economic and financial uncertainties persist, the government will strengthen monitoring of major risk factors through close cooperation with the Bank of Korea," and explained, "If necessary, market stabilization measures will be promptly implemented according to situation-specific response plans." Earlier, the U.S. Federal Reserve raised the target range for the benchmark interest rate by 0.25 percentage points to 5.25?5.50% at the regular FOMC meeting held on the 25th?26th (local time). This level is up to 2.00 percentage points higher than Korea's rate (3.50%).

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