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Looming U.S. rate hike and impact on Korean, Global economy Updated: 2021-06-21 14:58:18 KST

"If our economy is expected to continue its solid pace of recovery, we will orderly normalize the current easing of monetary policy at an appropriate time"

"With regard to interest rates, we continue to expect that it will be appropriate to maintain the current zero to one quarter percent target range for the federal funds rate until labor market conditions have reached levels consistent with the committee's assessment of maximum employment and inflation has risen to 2-percent and is on track to moderately exceed 2-percent for some time."

A year and half into the fight against the coronavirus pandemic and ensuing stimulus measures, the world is now keeping a close eye on the timing of a rate hike and tapering.
And St. Louis Fed President James Bullard's remarks on possible U.S. rate hike as early as next year has hit the financial markets.

South Korea's exports are set to climb by double digits again in June as the global economy shakes off the effects of the pandemic, though a slower pace from recent months suggests the days of outsize gains may have passed.
Exports rose 29-and-a half percent in the first 20 days of the month from a year earlier. Adjusted for calendar effects, average daily shipments increased 33.7 percent in the period, which had half a business day less compared with last year.

Looming U.S. rate hike and South Korea it's the topic of our news in-depth tonight, joining us in the studio is Dr. Kim Sei-wan, professor of economics at Ewha Womans University.
Professor Kim, good to have you on the show.

St. Louis Federal Reserve President James Bullard's recent comment that he sees an interest rate hike happening as early as next year is causing a hit to the financial markets. His estimate is quicker than the latest outlook released by the Federal Open Market Committee which said a hike was possible in 2023. What's your assessment of current and near-term inflationary pressure in the U.S., and could a rate hike be on the horizon next year?

Despite a patchy vaccine rollout despite an upheaval when it comes to the pandemic still being felt across the region, when we look at the exports numbers for South Korea, the demand side is still very strong?

What does that mean for the overall inflation outlook particularly as we're quite clearly dealing with a renewed sense of hawkishness at the Fed and other central banks, as well?

Does that mean we can actually see some of the first central bank liftoffs in Northeast Asia?
June's early trade data show exports remain the driver of Korea's recovery. Is that likely to bolster views that the Bank of Korea is gearing up for an earlier rate hike than most developed peers?

The Asian and European markets dipped on looming U.S. rate hike while dollar and Treasury yields surged. How are you observing the market reactions to the possibility of an early U.S. rate hike?

As U.S. Fed taper looms, global central banks are eyeing their own time of exit from stimulus. How much impact would an early U.S. rate hike have on the rate decisions of other central banks around the world as well as the global economy?

The Korean government and the BOK don't seem to be on the same page on tapering as the government pushes for up to 30 trillion-won stimulus package in the latter half of this year. How do you see the disharmony and when would be the right time for tapering in Korea?

Dr. Kim Sei-wan, professor of economics at Ewha Womans University for our news in-depth tonight. Thank you for your insights.
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