September 20, 2017 / 11:27 PM / a year ago

S.Korea sees limited impact from Fed asset drawdown; will stabilize markets if needed

SEOUL, Sept 21 (Reuters) - South Korea’s vice finance minister said on Thursday the government sees limited financial market impact from the Federal Reserve’s decision to shrink its balance sheet and vowed to act to stabilize financial markets if volatilities widen.

“The (Fed’s) decision seems to be line with market expectations and no major financial market impact is expected as such,” vice finance minister Ko Hyoung-kwon said before a policy meeting with the Bank of Korea and financial regulators.

The policy meeting was scheduled to discuss any impact from the Fed meeting, where policymakers left U.S. interest rates unchanged and said the central bank would begin in October to reduce its $4.2 trillion in holdings of U.S. Treasury bonds and mortgage-backed securities.

Ko added that the government will act to stabilize financial markets should excessive volatilities arise, given that bond yields can temporarily increase. (Reporting by Cynthia Kim, Dahee Kim; Editing by Richard Pullin)

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