South Korea’s monetary policy usually moves in tandem with that of the U.S. after an average 10-month time lag, a report showed Wednesday, as market watchers are keeping eyes on the time frame of a much-awaited rate hike in the world’s largest economy.
The report, compiled by Woori Finance Research Institute, showed that since May 1999, South Korea’s interest rate hikes and reductions have come some 10 months after the U.S. Federal Reserve’s rate decision.
The study, however, showed that South Korea did not always track rate moves in the U.S., citing seven cases in which the two countries adjusted their rates in different directions.
The study comes as the U.S. is expected to start normalizing rates this year, a move that many analysts project could spur an ensuing rate hike in Korea as well.
Since August last year, the Bank of Korea has lowered the key policy rate by a total of 1 percentage point, sending the base rate to a record low of 1.5 percent.
BOK Gov. Lee Ju-yeol has stressed the need to be shrewd in following U.S. rate moves, implying that the central bank will likely sustain its accommodative stance for the time being.
“Policy circumstances may rapidly change due to factors, such as a possible U.S. rate hike, but there is a need to be prudent in adjusting the stance of the monetary policy if the economic recovery is insufficient,” he said in a June 12 speech. (Yonhap)
