US shutdown worries South Korean central bank

Seoul, Oct 10: Bank of Korea (BOK), South Korea's central bank, has expressed concerns over the US government's shutdown, saying that uncertainties over the US fiscal crisis would serve as a downside risk factor to the global economy.

"The global economy will sustain its modest recovery going forward, but the heightening of uncertainties surrounding the US government budget bill and debt ceiling increase," reported Xinhua citing the BOK in a statement after deciding to freeze the policy rate at 2.5 percent.

The BOK noted that global financial market conditions may change in accordance with the Federal Reserve's decision on the tapering of its monthly bond purchases, cautioning that those factors would act as downside risks to growth.

If Congress fails to raise the current debt limit of $16.7 trillion by the deadline of Oct 17, the US administration will fall into default on debt for the first time in the country's history.

Market watchers said that concerns over the prolonged US fiscal crisis lowered possibilities for the Fed tapering in October.

IANS