South Korea policymakers: US Fed move prolongs market uncertainty

[SEOUL] Senior South Korean economic policymakers said on Friday the US central bank's decision to hold interest rates steady meant an elevated level of uncertainty would continue to affect financial markets for some time.

South Korea's Vice Finance Minister Joo Hyung-hwan said given that uncertainty, authorities would advise financial institutions to manage liquidity conservatively, even though they had abundant foreign exchange.

Bank of Korea Governor Lee Ju-yeol said US Federal Reserve Chair Janet Yellen had attempted to give a balanced account of factors influencing the US central bank's future policy direction. "A big change to note this time is that the Fed cited global environments and China," Mr Lee said at a scheduled meeting with local commercial bank executives. "This made things complicated for market players and uncertainty remains severe." Vice-minister Joo said at a meeting with officials from other financial authorities that administrators would closely monitor foreign-currency liquidity, including changes in the costs of borrowing offshore or in repayment conditions. "Given the lowered inflation projection (for the United States) and other factors, the pace of US interest-rate increases will likely be modest even when it begins doing so," Mr Joo said at the meeting, which is convened when a major event is seen influencing financial markets.

Both meetings were held before local financial markets started trade.

REUTERS