Korea Business News Agency - NSP NEWS AGENCY.

(Seoul=NSP News Agency) Jiye Kim Journalist = An economics professor voiced out that Korea should minimize the further reduction in interest rate in order to compromise the effect of the current US interest rate hike.

Kim Jeong-Sik, an economics professor from Yonsei university, highlighted in a seminar titled ‘Korean interest and exchange rate policy in response to the climbing interest rate of the United States and China’s yuan depreciation’ that Korea should deter the possible asset bubble coming along with the current interest hike. “Even if it could aggravate the already sluggish Korean economy, we should avoid further reduction in interest rate.” He said.

Professor Kim reckoned, “Since Korea’s interest rate is low at an unprecedented scale now, there has been no distinct gap between that of US.” He added, “If there is rise in interest rate of US, Korean capital outflow to the US is inevitable due to the widening interest rate disparity.”

Korea has responded to the US interest rise by cutting down that of Korea, and raising it again after certain period, rather than depreciating Korean won against dollar. Kim stressed on the fact that excessive interest cut should not be an easy choice given its possibility to lead economic calamity when it soar up later. “It is better to deal with currency exchange rate instead of toying with interest rate”, he added.

NSP News Agency/NSP TV Jiye Kim Journalist, graekim@nspna.com
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