BOK chief cites heightened possibility of rate hike in US

The head of South Korea's central bank said Tuesday that there is a heightened possibility that the US Federal Reserve could raise its interest rates.

Bank of Korea Gov. Lee Ju-yeol made the comment in a meeting with leading economists and scholars on the current economic conditions, citing recent remarks by Federal Reserve Chair Janet Yellen.

Last week, Yellen said the Federal Open Market Committee continues to anticipate that gradual increases in the federal funds rate will be appropriate over time to achieve and sustain employment and inflation near statutory objectives.

"In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months," Yellen said Friday in a symposium in Jackson Hole, Wyoming.

Still, she did not provide any specific time frame for the possible rate hike.

Lee also said it is meaningful that South Korea's economy has received a positive assessment, citing global credit appraiser Standard & Poor's recent upgrade of South Korea's sovereign rating.

S&P raised South Korea's sovereign rating one notch to a record high of AA from AA- earlier this month

AA is the third highest grade in the S&P evaluation scheme and is possessed by France, Belgium and Britain, placing South Korea one level higher than China and two higher than Japan.

It is the second time in a year that S&P has upgraded the country's sovereign rating, and comes less than a year since the last upgrade to AA- in September last year.

Lee also called for a consistent policy to tackle the low birthrate as he vowed to strengthen research on the low birthrate and aging population.

Fitch Ratings Inc. has cited South Korea's aging population as one of the risks facing Asia's fourth-largest economy.

In 2015, South Korea's birthrate reached 1.24, the second-lowest in the Organization for Economic Cooperation and Development, a group of 34 mostly rich nations. (Yonhap)