1%-Point Interest Rate Differential: A Tipping Point for Massive Capital Outflows?
Kang, Tae Soo | July 2018
Abstract
The Bank of Korea (BoK) has reacted in a somewhat different manner from other emerging central banks. The BoK’s policy rate has frozen in the range of 1.50 percent during the past seven months since November 2017. The rate gap between the Fed and the BoK expanded to 0.50 percent points after the June FOMC meeting. The global financial markets expect two more rate hikes by the Fed this year. There has been a strong argument that capital outflows are unavoidable in situations where the interest rate gap between the Fed and Bok widens to over 1%-points. What poses a threat to financial market participants and policy makers is a massive "sudden stop" of capital movements.
Citation
Kang, Tae Soo. 2018. 1%-Point Interest Rate Differential: A Tipping Point for Massive Capital Outflows?. © Korea Institute for International Economic Policy. http://hdl.handle.net/11540/8606.Keywords
Financial Stability
Financial Management System
Financial Restructuring
Capital Market Development
Market Development
Economics
Erosion
International Economics
Macroeconomic
Macroeconomic Analysis
Performance Evaluation
Impact Evaluation
Foreign and Domestic Financing
Foreign Direct Investment
International Financial Market
Multilateral Financial Institutions
Economic Recession
Market
Crisis
Economic indicators
Growth models
Gross domestic product
Macroeconomics
Economic forecast
Business Financing
Investment Requirements
Business recessions
Multilateral development banks
Regulatory reform
Capital
Exports
Economic development projects
Economic policy
Economic forecasting
Investment Requirements
Banks
International banks and banking
Capital movements
Central banks and banking
Bills of exchange
Swaps
Banks and banking
Financial crisis
Credit control
Credit allocation
Capital market
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Citable URI
http://hdl.handle.net/11540/8606Metadata
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