S. Korea vows 'stern' measures against volatility following U.S. rate cut

SEOUL, March 4 (Yonhap) -- South Korea's financial authorities on Wednesday said they will take steps to stabilize the local market if necessary, hours after the U.S. Federal Reserve delivered an unexpected rate cut in its first emergency move in more than a decade in light of the new coronavirus outbreak.

"(The government) will take stern measures under its contingency plan in case market volatility unusually increases, while closely monitoring market conditions in close cooperation with other related agencies," Vice Finance Minister Kim Yong-beom said in an emergency meeting attended by officials from various financial institutions, including the Bank of Korea (BOK), the Financial Services Commission and the Financial Supervisory Service.

The emergency meeting came shortly after the U.S. Fed voted unanimously to slash its key rate by a half of one percentage point to a target range of between 1.0 percent and 1.25 percent.

The Fed had been widely expected to reduce the base rate in its upcoming Federal Open Market Committee (FOMC) meeting, slated for March 17-18, in response to the outbreak of the new coronavirus that many believe may slow the U.S.' economic growth this year.

However, its latest monetary policy decision came in an emergency meeting held Tuesday (U.S. time), the first of its kind since 2008.

Analysts here believe the Fed may further slash its policy rate at its upcoming FOMC meeting.

The South Korean central bank held its own emergency meeting Wednesday, apparently to review the possible impact of the U.S. rate cut on the South Korean economy.

The BOK decided last week to keep its base rate frozen at 1.25 percent, insisting what it called "microeconomic measures" may be more effective, at least for now, at revamping the local economy hit by the spread of COVID-19.

The outcome of the BOK meeting was due later in the day.

bdk@yna.co.kr
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