Fed's rate freeze gives Bank of Korea room to breathe: Expert
- 6 years ago
미 연준 기준금리 동결...한국에 미칠 영향은?
The U.S. Federal Reserve held its interest rates unchanged on Wednesday, citing the strong U.S. economy.
But it signaled an increase in borrowing costs in September.
Our Ko Roon-hee talked to experts about what this means for the Korean economy.
As expected, the Fed kept its benchmark rates unchanged at a range of 1-and-three-quarters to 2 percent... boosting expectations that it'll raise rates in September.
This means the Korean economy have until next month to adjust to the changes.
A local expert says it's highly likely that the Bank of Korea will keep its own key interest rate unchanged later this month on August 31st.
"If the Federal Reserve raised (the rate) today, then the Bank of Korea should have raised another quarter percentage point, but the Federal Reserve decided to postpone until September, so I think the Bank of Korea has earned another one month for taking breath."
Another expert added that this extra time is important because Fed's rate hike could not only cause capital flight from Korea… but could also negatively affect the country's exports.
"If the Fed raises rates, financial markets in emerging economies tend to get shaken up, as seen in the first half this year. And since Korea relies heavily on exports, it could affect Korea's real economy."
An advance estimate of GDP for the second quarter released last Friday,... showed that the U.S. economy is growing at an annual rate of 4-point-1 percent,... the fastest rate in nearly four years.
The BOK kept its rate steady for the eighth straight month in July at one-point-five-percent.
At present, the U.S. benchmark rate is zero-point-five percentage points higher than that of Korea's.
Ko Roon-hee, Arirang News.
The U.S. Federal Reserve held its interest rates unchanged on Wednesday, citing the strong U.S. economy.
But it signaled an increase in borrowing costs in September.
Our Ko Roon-hee talked to experts about what this means for the Korean economy.
As expected, the Fed kept its benchmark rates unchanged at a range of 1-and-three-quarters to 2 percent... boosting expectations that it'll raise rates in September.
This means the Korean economy have until next month to adjust to the changes.
A local expert says it's highly likely that the Bank of Korea will keep its own key interest rate unchanged later this month on August 31st.
"If the Federal Reserve raised (the rate) today, then the Bank of Korea should have raised another quarter percentage point, but the Federal Reserve decided to postpone until September, so I think the Bank of Korea has earned another one month for taking breath."
Another expert added that this extra time is important because Fed's rate hike could not only cause capital flight from Korea… but could also negatively affect the country's exports.
"If the Fed raises rates, financial markets in emerging economies tend to get shaken up, as seen in the first half this year. And since Korea relies heavily on exports, it could affect Korea's real economy."
An advance estimate of GDP for the second quarter released last Friday,... showed that the U.S. economy is growing at an annual rate of 4-point-1 percent,... the fastest rate in nearly four years.
The BOK kept its rate steady for the eighth straight month in July at one-point-five-percent.
At present, the U.S. benchmark rate is zero-point-five percentage points higher than that of Korea's.
Ko Roon-hee, Arirang News.