US Interest Rate Cuts and Trump's Election: Lee Bok-hyun Emphasizes "Thorough Risk Management"

Financial Situation Review Meeting on the 8th

As the U.S. Federal Reserve (Fed) lowered the benchmark interest rate by 0.25 percentage points, Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), urged for strengthened risk management in preparation for policy changes following Trump's election.

On the 8th, the FSS held a financial situation review meeting chaired by Governor Lee to discuss responses to the U.S. rate cut and the election results. Governor Lee emphasized, "Although the Fed has lowered the policy rate, uncertainties in the domestic financial situation remain significant," adding, "We must remain vigilant and ensure thorough risk management."

Particular attention is being paid to changes in U.S.-China policy directions. The FSS plans to assess sector-specific risks in preparation for expected tariffs following Trump's election, reductions or eliminations of subsidies for electric vehicles and solar power under the Inflation Reduction Act (IRA), and a decrease in ESG investments. Additionally, financial support to enhance corporate growth engines will be strengthened.

Uncertainties related to China are also being closely monitored. The FSS will carefully examine the impact on the Korean economy and finance of China's economic stimulus scale, normalization of local government debt, real estate market revitalization policies, and China's response to Trump's tariff policies.

Meanwhile, the FSS will also make every effort to manage household debt next year. Governor Lee stated, "We will meticulously establish household loan management plans across all financial sectors to ensure the household debt-to-GDP ratio gradually stabilizes downward, and we will strictly manage lending practices to be within borrowers' repayment capacity."

The FSS also anticipates increased volatility in related theme stocks and virtual assets such as Bitcoin following Trump's election and plans to strengthen market surveillance. They intend to take strict measures if any signs of unfair trading are detected.