South Korea Says Rate Rises May Fuel Foreign Inflows

South Korea may face the risk of a foreign capital influx and asset bubbles if borrowing costs are increased further to curb inflation, the finance ministry said.

“Raising interest rates to contain inflation could easily cause herd behavior in foreign capital inflow and create asset bubbles,” the Ministry of Strategy and Finance said in an e-mailed statement prepared for a ministerial meeting today on international economic policies.