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THE INVESTOR
January 22, 2018

Economy

US rate hike unlikely to cause drastic capital outflow

  • PUBLISHED :October 23, 2017 - 14:28
  • UPDATED :October 23, 2017 - 14:28
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[THE INVESTOR] The head of Korea’s central bank said on Oct. 23 that Seoul is unlikely to suffer any drastic capital outflow, even if the interest rate gap between Korea and the United States is reversed.
 
Bank of Korea Gov. Lee Ju-yeol made the assessment in a parliamentary audit of the central bank, noting that the inflow and outflow of capital is not determined only by the rate gap.
 
In June, the US Federal Reserve raised its key rate by 25 basis points to between 1 percent and 1.25 percent, narrowing the rate gap with Korea.
 
Last week, the BOK kept its benchmark interest rate at a record low of 1.25 percent, extending its wait-and-see approach for the 16th consecutive month.
 
Lee told lawmakers that the impact of a US rate hike, possibly later this year, will not be big, since such a course has already been factored into Korea’s financial markets.
 
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