The Bank of Korea won’t raise its benchmark interest in knee-jerk reaction to U.S. moves, said a senior bank official Thursday.
“The U.S. benchmark rate is an important reference index, but our base rate must take consideration of our own conditions,” said Jang Byung-wha, BOK’s deputy governor after a meeting among senior officials following overnight hike by the U.S. Federal Reserve by 25 basis points to a target range of 0.75 percent to 1.0 percent.
“What matters more (in determining monetary policy) are our economic and financial conditions,” he said. The central bank in February kept the base rate unchanged at 1.25 percent for the eighth straight month. The bank does not hold a monetary policy meeting this month and is scheduled to meet next on April 13.
“Although some fret about faster tightening pace, the comments from (Fed Chair Janet Yellen) had not been that hawkish,” he said. Yellen as in December indicated gradual and up to three hikes this year.
The Korean government bond prices recovered after the Fed move and indications were in line with expectations.
“There is still the uncertainty of the next hike coming in June or September,” he said.
Apart from the interest rate movement in the U.S., the BOK deemed the upcoming presidential election, U.S. and China’s hostile trade policies, and political uncertainties in Europe as risk factors.
The central bank said it will promptly act together with the government should the markets turn too volatile.
By Boo Jang-won
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]