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The skyline of the city of Incheon is pictured in an early morning aerial view south of Seoul, South Korea, January 21, 2018. REUTERS/Fabrizio Bensch

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SEOUL, May 16 (Reuters) – South Korean government bond futures plunged early on Monday after the central bank chief left the door open for an interest rate hike bigger than expected. usual in the coming months to fight inflation.

The June contract in the most liquid three-year Treasury bond futures fell 43 ticks before paring losses slightly to trade 37 ticks lower at 105.23 at 0020 GMT.

“(Maybe I can tell) after watching the May policy meeting and more data around July and August,” Bank of Korea Governor Rhee Chang-yong said when asked by reporters if the bank was considering a 50 basis point hike. at its May 26 meeting.

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South Korea’s central bank typically raises or lowers its benchmark interest rate in increments of 25 basis points.

In their first face-to-face meeting since taking office this month, Rhee and Finance Minister Choo Kyung-ho agreed to strengthen policy coordination in the fight against inflation and instability. financial markets, the greatest current risks facing the economy.

They also agreed that downside risks to growth in Asia’s fourth-largest economy had increased, a joint statement from the two organizations added.

The country’s two most powerful economic policymakers held their first face-to-face meeting on Monday after taking office this month and following their participation in a Friday meeting hosted by President Yoon Suk-yeol.

The statement did not disclose further comments on specific asset classes or indicators.

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Reporting by Choonsik Yoo and Seunggyu Lim; Editing by Sam Holmes

Our standards: The Thomson Reuters Trust Principles.

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