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| Finance Minister Choo Kyung-ho, 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, March 23. Yonhap |
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 (BOK) Gov. Rhee Chang-yong and other officials.
On Wednesday (U.S. time), 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 U.S. 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."
In a separately held meeting, the BOK said that the Fed's rate hike is within its forecast and signals its commitment to fighting inflation amid worries over financial instability.
It echoed the view of the finance ministry, saying that active monitoring is necessary as volatility could heighten anytime at home and abroad.
"We will closely monitor changes in external conditions and trends in domestic price variables and capital inflows and outflows, and take active market stabilization measures if necessary," the BOK said in a press release. (Yonhap)
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