Bank of Korea keeps door open to raising interest rate

Bank of South Korea (BOK) has warned on Tuesday of increased volatility as global markets brace for future hikes from the U.S. Federal Reserve.

Bank of South Korea’s governor Ri Chang-yong

BOK’s governor Ri Chang-yong said he will join Fed chairman Powell in tightening the focus on inflation if rates remain out of control, keeping the door open for another significant rate hike.

During the Jackson Hole meeting, Ri added that Powell’s remarks at the central bankers’ meeting were largely in line with his expectations.

The U.S. interest rates’ increase could further weaken the South Korean won, Ri mentioned, adding this may lead to stronger inflation in Korea among other uncertain factors that will influence monetary policy.

If Korea’s inflation rate continues to rise above 5 percent, the BOK will follow Powell and shall prioritise price stability, Ri commenting on raising interest rates.