Han Kyung-yeon “US interest rate ↑, negative impact on Korean finance and real economy”
“We must be wary of excessive expansion of financial expenditures”
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An analysis has shown that the recent rise in US long-term interest rates can negatively affect the domestic financial market and the real economy. For this reason, it is a diagnosis that we are wary of excessive fiscal expenditure and stabilization of long-term interest rates.
On the 25th, the Korea Economic Research Institute announced in a report on’Korea-US Monetary Policy Comparison: Financial Crisis vs. Corona 19′. Said it would.
Han Kyung-yeon also raised concerns that the outflow of foreign capital, such as foreign investment, will accelerate due to the rise in US interest rates. There is also a prospect of mixed concerns that if such an aftermath of the financial market is transferred to the real market, major macro variables such as gross domestic product and investment may contract.
Han Kyung-yeon advised that Korea needs to manage the stabilization of long-term interest rates. It is pointed out that the short-term interest rate targeting policy should be deviated from the standard interest rate.
In particular, he stressed that, considering that economic stimulus was focused on fiscal policy to respond to Corona 19, it was necessary to be wary of excessive expansion of fiscal expenditure even to enhance the effectiveness of monetary policy.
Lee Seung-seok, associate researcher Han Gyeong-yeon, explained, “It is desirable to stabilize the long-term interest rate downward in order to proactively respond to the drop in asset prices such as a plunge in the stock index and to reduce the burden of financing costs for economic entities that increased during the economic crisis.
Shin Hyun-bo, Hankyung.com reporter [email protected]
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