(ATTN: UPDATES with market close in paras 5-7)
SEOUL, May 13 (Yonhap) -- South Korea plans to take measures to stabilize the financial market if needed, as it has been suffering increased volatility on fears that the Federal Reserve may hike a key rate sooner than expected on inflation woes, a senior government official said Thursday.
First Vice Finance Minister Lee Eog-weon said there is no need for market players to sensitively react to U.S. inflation data as its consumer prices are judged to have temporarily risen amid an economic recovery and a low base effect.
"The government will step up market monitoring and prepare to take timely steps to stabilize the financial market when necessary," Lee said at a government meeting on macroeconomic conditions.
Global inflation fears mounted as U.S. consumer prices shot up 4.2 percent on-year in April, the fastest in 13 years.
South Korea's share prices sank for the third straight session Thursday, taking a cue from overnight plunges on Wall Street over inflation fears.
The country's benchmark stock index, the KOSPI, declined 39.55 points, or 1.25 percent to end at 3,122.11.
The Korean currency closed at 1,129.30 won per the U.S. dollar, down 4.60 won from the previous day.
The country also faces growing inflationary pressure, with the consumer price index growing 2.3 percent on-year in April, the fastest on-year gain in almost four years.
Earlier in the day, Lee told a radio program that it is too early to say that the country's economy is overheated enough to warrant a rate hike amid accelerating inflation.
He stressed that inflation growth picked up in March and April due largely to a low base effect from last year when inflationary pressure remained muted amid the pandemic.
Policymakers said inflation will likely pick up in the second quarter due largely to the lower base effect and high prices of agricultural and petroleum products.
Last month, the Bank of Korea (BOK) froze its key interest rate at a record low of 0.5 percent amid concerns of another wave of infections. The BOK aims to keep inflation at 2 percent over the medium term.
(News Focus) Housing policy at risk of further losing credibility, public support
Short selling revisited on retail investors' increased sway
Legislation on compensating virus-hit small biz picks up steam
(News Focus) S. Korea drums up measures to revive consumption, create jobs next year amid pandemic
S. Korean companies bet big on hydrogen for zero-emission goal