Vice Minister Gi: "No Need to Overreact to Increased Volatility Such as US Stock Price Decline"

"US Consumer Price Increase Influenced by Temporary Factors and Base Effects"

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Lee Okwon, the 1st Vice Minister of the Ministry of Economy and Finance, emphasized on the 13th that "there is no need to overreact" considering the strong recovery of our economy and solid external credibility, in relation to the increased volatility in the international financial markets such as the decline in U.S. stock prices and the rise in government bond yields.

On the same day, Vice Minister Lee held a 'Macroeconomic Financial Review Meeting' attended by departments related to macroeconomic finance within the Ministry of Economy and Finance, the Bank of Korea, the Financial Services Commission, and the International Financial Center to assess the ripple effects on our economy and financial markets following the announcement of the U.S. consumer price inflation rate for April.

According to the U.S. Department of Labor the previous day, the Consumer Price Index (CPI) for April rose by 0.8% compared to the previous month and by 4.2% compared to the same period last year. As a result, volatility in the international financial markets has increased, with U.S. stock prices falling and government bond yields rising.

Vice Minister Lee evaluated that "temporary factors that may appear during the economic recovery process such as supply shortages and deferred demand, as well as base effects, were the main causes of the increase."

He also stated, "Risk factors in the international financial markets such as the progression of COVID-19, uneven recovery speeds among countries, and geopolitical factors still exist," and emphasized, "The possibility of increased volatility in financial markets in the future cannot be ruled out." He then urged, "Please strengthen monitoring of these risk factors and be thoroughly prepared to implement market stabilization measures promptly if necessary."