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Outcome of Fed meeting to have limited impact on financial market: official

All News 08:47 January 27, 2022

SEOUL, Jan. 27 (Yonhap) -- The Federal Reserve's signal at a rate hike in March is expected to have a limited impact on the South Korean financial market as the global markets digested the outcome of its policy meeting with little volatility, a senior government official said Thursday.

After its two-day policy meeting, Fed chief Jerome Powell said Wednesday (U.S. time) that the U.S. central bank has "quite a bit of room" to hike the federal funds rate to fight inflation.

The Fed is also expected to end its bond-buying pandemic-stimulus program in March and later launch the reduction of its asset holdings.

"The global financial market showed limited volatility overnight in response to the outcome of the Fed's meeting," First Vice Finance Minister Lee Eog-weon said at a government meeting on the financial market.

U.S. stock markets closed mixed as investors assessed the Fed's policy meeting. The Dow Jones Industrial Average fell 0.38 percent, while the S&P 500 went down 0.15 percent. The tech-heavy Nasdaq Composite Index inched up 0.02 percent.

South Korea's key stock index sank for the fourth straight day Wednesday as investors were on the sidelines ahead of the Fed meeting to await clues for the U.S. monetary policy directions.

The KOSPI fell 11.15 points, or 0.41 percent, to end at 2,709.24 points, the lowest closing in 14 months.

Lee said the government will keep close tabs on market situations at home and abroad as there is high uncertainty about the pace of the U.S. monetary tightening and global inflation risks.

"The government will take measures to stabilize the financial market, if needed, and will seek policy coordination with the Bank of Korea in a bid to prompt the central bank to buy government bonds in a timely manner," Lee added.

Electronic signboards at a Hana Bank dealing room in Seoul show the benchmark Korea Composite Stock Price Index (KOSPI) closed at 2,709.24 points on Jan. 26, 2022, down 11.15 points, or 0.41 percent, from the previous session's close. (Yonhap)


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