Anchor: For the second time in three months, the U.S. Federal Reserve raised its key interest rate by point-25 percent. The measure came as the American economy appears to be on track for robust growth, but the South Korean government and economists are concerned that the U.S. move could be another negative factor for the Korean economy.
Here is our Kim Bum-soo.
 
Report:
 
[Sound bite: Fed Chairwoman Janet Yellen]
"Today, the federal open markets committee decided to raise the target range for the federal funds rate by one quarter percentage point."
 
As widely anticipated by financial markets, the Federal Open Market Committee(FOMC) of the U.S. central bank on Wednesday raised its rate from a target range of point-75 percent to one percent.
 
While hiking the rate for the second time in three months, Federal Reserve Chairwoman Janet Yellen noted the U.S. economy continues to expand at a moderate pace and any further hikes this year would be gradual.
 
[Sound bite: Fed Chairwoman Janet Yellen]
"Our decision to make a gradual reduction in the amount of policy accommodation reflects the economy's continued progress toward employment and price stability objectives assigned to us by law."
"Today's decision also reflects our view that waiting too long to scale back some accommodation could potentially require us to raise rates rapidly sometime down the road, which in turn could risk disrupting financial markets and push the economy into recession."

The market expects two more rate hikes in the U.S. this year. If the Fed raises the rate by point-25 percentage point twice, the U.S. lending cost will be higher than the Bank of Korea’s one-point-25 percent. 

Despite growing confidence over the American economy, Prof. Yang Jun-sok and other experts of the Korean economy pointed to the concern that the Fed decision could lead to a cash outflow from the South Korean financial market. 

[Sound bite: Prof. Yang Jun-sok - Dep't of Economics, Catholic Univ. of Korea]
"When U.S. raises its interest rates, capital tends to flow out of other countries into US. For Korea, the total amount differs depending on economic conditions, but one study says that if U.S. raises the rates by point-25 percentage point, three trillion won flows out of the Korean stock market within three months. However, more important is the speed of the outflow, since if an outflow is too rapid, it can cause a foreign currency crisis. Because Korea has more than one-point-three quadrillion won of household debt, much of it to marginal households, Korea cannot raise its rates with the US easily. Korea will have to monitor its capital conditions carefully, and raise the rates quickly if and when the outflow shows signs of accelerating."

The amount of household debt is almost 91 percent of the nations gross domestic product.
 
Experts are also concerned that the U.S. rate hike could slow down the growth in emerging economies like China, and in turn hurt the Korean economy that trade heavily with them. 
Kim Bum-soo, KBS World Radio News.