* S.Korea c.bank sees Fed hiking in Dec
* BOK will not raise rates right after Fed rate hike
* BOK chief says rate cuts were not aimed at propping up
(Adds BOK chief comments)
By Christine Kim
SEOUL, Oct 4 South Korea's central bank said on
Tuesday that any U.S. interest rate hikes had only limited
prospects of triggering a massive flight of capital from South
Korea, and it would not hike rates immediately after the U.S.
"When we consider the fundamentals of our economy, sovereign
debt ratings and foreign exchange reserves, the chance that we
will experience great outflows is not big," the Bank of Korea
(BOK) said in prepared responses to lawmakers' requests ahead of
a parliamentary audit.
"Even if there are outflows, we feel local banks have ample
foreign exchange liquidity to withstand them."
Bank of Korea Governor Lee Ju-yeol later told lawmakers a
Federal Reserve rate hike would not lead directly to higher
interest rates at home.
"We'll have to make a decision on policy after we see what
happens to markets and the economy after the Fed rate hike," Lee
Between Sept. 1-23, foreigners bought 1.5 trillion won
($452.98 million)worth of South Korean shares and lowered their
bond holdings by 0.4 trillion won between Sept. 1-22, the BOK
The BOK's policy rate, currently at a record-low 1.25
percent, has been trimmed five times since August 2014.
Commenting on the effects of recent interest rate cuts, the
central bank said the reductions have helped underpin growth
momentum. However, it said the rate cuts have yet to adequately
boost consumption and investment.
Lawmakers criticised the central bank on Tuesday for not
taking adequate measures to curb household debt, which has
skyrocketed since the BOK's easing cycle began.
Lee said the bank's accommodative policy was not aimed
solely at propping up the property market.
"Our policy has to trickle down to consumers, but we haven't
seen much of that yet as the link between interest rates and
consumerism has weakened. The property market was not our
focus," Lee explained.
The central bank said its policy would focus on easing
temporary economic slowdown and managing anticipated pressure on
the job market from an ongoing government push for structural
reform in the corporate sector and the labour market.
($1 = 1,103.8000 won)
(Reporting by Christine Kim; Editing by Shri Navaratnam and