S.Korea central bank chief sees no change in stance after Powell speech

SEOUL (Reuters) -The head of South Korea’s central bank said on Tuesday his bank’s monetary policy stance would not change after Federal Reserve Chair Jerome Powell said last week the U.S. economy will need tight monetary policy “for some time”.

Bank of Korea Governor Rhee Chang-yong said his bank would closely watch the Fed’s policy decisions as the volatility in global markets has increased, the central bank said in a text message to reporters.

“(Powell’s speech) was not much different from what the Bank of Korea thought when it held a meeting to set interest rates on August 25, and therefore, there will be no change in our policy management,” Rhee was cited as saying.

Risk assets and bonds were hit by broad selling after Powell said on Friday the Fed would continue to tighten monetary policy to bring down inflation even as those rate increases cause pain for households and businesses.

Rhee told Reuters in an exclusive interview soon after Powell’s speech his bank would not likely end its tightening cycle before the Fed.

The BOK was among the first central banks to abandon pandemic-era monetary stimulus, raising its key policy rate by 2 percentage points since August last year to 2.5%.

(Reporting by Choonsik Yoo; Editing by Kim Coghill & Shri Navaratnam)