SEOUL, Oct. 30 (UPI) -- Analysts say China's interest rate hike may weigh on domestic markets short-term as demand could slow from China, hurting export growth in South Korea.
But, they added, the long-term impact could be neutral as commodity and oil prices may decline, easing concerns about inflationary pressure, the Korea Times reported Saturday.
The People's Bank of China Thursday raised the benchmark one-year bank deposit and lending rates by 27 basis points each to 5.5 percent and 2.25 percent, the first rate hike in nine years. It is seen as a part of China's initiatives to slow its fast growing economy to a measured pace, following the release of its GDP data last week.
"Despite signs that the Chinese economy is experiencing a modest slowdown, reflected in the 9.1 percent third-quarter economic growth, a fall from 9.6 percent in the second, the rate hike shows that authorities are confident of achieving a soft landing," said Daewoo Securities analyst Kim Sung-joo. "But the interest rate hike will dampen investor sentiment on the stock market as the export momentum could be slowed faster than expected."
