Checking Government FOMC Impact... "Maintaining Caution Amid External Uncertainties"

Macroeconomic and Financial Issues Meeting Presided Over by Acting Prime Minister Choi

The government announced that it will closely respond to the trends in major countries' monetary policies, including the Federal Open Market Committee (FOMC) decision to keep policy rates unchanged, and their impact on the Korean economy.

On the 20th, Choi Sang-mok, Acting Prime Minister and Minister of Economy and Finance, presided over a macroeconomic and financial issues meeting and instructed, "We will continue to operate a 24-hour joint market monitoring system with relevant agencies and closely examine the policy trends of major countries including the U.S. and their impact on our economy."

At the meeting attended by Lee Chang-yong, Governor of the Bank of Korea, Lee Bok-hyun, Chairman of the Financial Supervisory Service, and Kim So-young, Vice Chairman of the Financial Services Commission, the domestic and international financial and foreign exchange market trends following the FOMC’s decision to hold interest rates steady and future response directions were discussed.

The FOMC, which convened overnight, kept the benchmark interest rate unchanged for the second consecutive time since January this year (upper bound of 4.50%). The committee maintained its outlook for a 50 basis point rate cut this year, citing a slowdown in U.S. growth and an expansion in inflationary pressures.

Chairman Jerome Powell mentioned that there is no need to rush rate cuts, while long-term inflation expectations remain well anchored. The international financial market responded to the meeting’s outcome as accommodative, with major U.S. stock indices rising and Treasury yields falling.

Participants agreed that "although volatility in the domestic financial and foreign exchange markets has somewhat eased recently, caution must be maintained due to ongoing external uncertainties such as the U.S. mutual tariff imposition on the 2nd of next month, concerns over global economic slowdown including the U.S., geopolitical factors like the Middle East and Ukraine, and the magnitude and timing of monetary policy adjustments by major countries."

Acting Prime Minister Choi instructed, "Given that the international credit rating agency Fitch highly evaluated Korea’s external soundness due to continuous current account surpluses and a high ratio of net external assets to GDP, and global institutional investors expressed trust at the Korea Economic Briefing, relevant ministries should work together to ensure the maintenance of external credibility."