Uncertainties to weigh on S. Korean market: BOK chief

Bank of Korea Gov. Lee Ju-yeol speaks in a meeting with local bank heads held at the bank in Jung-gu, Seoul. / Yonhap

The South Korean financial market will continue to face lingering uncertainties in the short term despite a U.S. interest rate freeze, the central bank chief said Friday.

The U.S. Federal Reserve kept its key interest rate at a record low at its September meeting amid rising concerns over slumping global demand and unstable financial markets, stemming from China, the world's second-largest economy.

"Fed Chair Janet Yellen seemed to take a dovish stance, but short-term uncertainties will still weigh on the financial market," Bank of Korea Gov. Lee Ju-yeol said in a meeting with local bank heads.

At a post-meeting conference, however, Yellen signaled that the U.S. central bank will turn to hawkish at its next monetary meeting later this year.

"The Fed left open the possibility of a rate hike in October and December," said the BOK chief.

Ahead of the Fed decision, the South Korean stock market had experienced wild volatility and a 29-session selling spree by foreign investors due to fears that a higher U.S. rate will lead to raising interest burdens on many business and consumer loans.

South Korea's household debt has been gaining speed in recent months, reaching a record 1,130.5 trillion won (US$948.4 billion) as of end-June, in tandem with four rounds of rate cuts delivered by the central bank since August last year. (Yonhap)