SEOUL, May 26 (Yonhap) -- The Federal Reserve's planned end of a US$600 billion asset-buying program is not likely to have much impact on the U.S. and emerging financial markets, a U.S. professor said Thursday.
Volatility of global financial markets has increased ahead of the expected end of the second round of the quantitative easing, known as QE2, at the end of June.
Barry Eichengreen, a professor at UC Berkeley, said the size of the asset purchase is "relatively small," given the scale by U.S. financial markets.
"(The QE2) was an insurance policy against deflation. But the global financial landscape has changed ... and a lot of people are worried about inflation rather than deflation," Eichengreen said in a group interview with reporters. He is visiting South Korea to participate in a conference on the global financial system hosted by the Bank of Korea (BOK).
Eichengreen said as concerns about inflation risks have risen, it is "entirely logical" that the QE2 will end, but its impacts are widely expected to be limited on the global financial markets.
"But things could be different when the Fed begins to raise its policy rate. That could have potentially significant impacts on U.S. financial markets and on capital flows from the U.S. to emerging markets. But I don't expect the Fed to begin to move until next year."
BOK Gov. Kim Choong-soo earlier said that it is too early to comment on whether foreign capital could flee the Korean market following the end of the QE2 as there is high uncertainty.
But Kim said there would be no issue more important than the fallout of the planned end of the quantitative easing, which warrants being closely watched.
- Lee leads Samsung's bold, nimble moves
- Energy-hungry S. Korea taps into UAE's oil fields
- High inflation pushes BOK to hike key rate
- Middle East unrest feared to dampen Asian economy
- Android smartphone makers strive to stand out
- Unrest in Egypt feared to hit S. Korean exports
- S. Korea launches 'all-out' war against inflation
- Savings banks' overhaul won't hurt big financial firms: analysts
- Samsung to release new, thinner smartphone
- KOSPI reclaims 2,000-level on strong foreign buying
- Hana's KEB takeover heralds shakeup of Korean banking sector
- S. Korean online PC game developers eye mobiles, consoles
- S. Korea's reactor deal with Turkey hits snag
- (G20) Global leaders set financial reform drive in motion
- (G20) G-20 makes meaningful gain on current account imbalance
- 'Korea Initiative' gives momentum to emerging states
Home > Business > Market