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Preemptive measures in store to tackle risks from rising rates: chief policymakers

All News 09:03 July 04, 2022

SEOUL, July 4 (Yonhap) -- South Korea's finance minister, the central bank chief and financial regulators said Monday they will step up policy coordination to minimize fallout from rising interest rates at home and abroad.

In a meeting presided over by Finance Minister Choo Kyung-ho, they discussed economic and financial situations amid heightened external economic uncertainty from the prolonged war between Russia and Ukraine, and the Federal Reserve's aggressive monetary policy tightening.

The meeting brought together Bank of Korea Gov. Rhee Chang-yong; Lee Bok-hyun, chief of the Financial Supervisory Service; Kim So-young, vice chair of the Financial Services Commission; and Choi Sang-mok, senior presidential secretary for economic affairs.

They shared the view that they should make joint efforts to deal with economic risks, as the current "complex" economic crisis facing Asia's fourth-largest economy is expected to prolong for a considerable period of time.

"The participants agreed to preemptively respond to the situations in a bid to prevent macroeconomic risk factors from materializing amid rising interest rates at home and abroad," the finance ministry said in a statement.

South Korea has been facing the risk of stagflation, a mix of slowing growth and elevated inflation. The South Korean currency's sharp weakness is feared to put additional upward pressure on inflation as it boosts import prices.

Against this backdrop, market volatility also has recently amplified as demand for safer assets of the U.S. dollar increased amid the Fed's aggressive rate hikes and concerns about a global recession.

This photo taken July 4, 2022, shows Finance Minister Choo Kyung-ho (C) posing for a photo with the top central banker and the financial regulators ahead of their meeting on economic situations. The participants are Bank of Korea Gov. Rhee Chang-yong (2nd from R); Kim So-young, vice chair of the Financial Services Commission (L); Choi Sang-mok, senior presidential secretary for economic affairs (2nd from L); and Lee Bok-hyun, chief of the Financial Supervisory Service. (Yonhap)

sooyeon@yna.co.kr
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