The Bank of Korea Warns of Increased Uncertainty in US Economic Outlook and Expanding Market Volatility

Deputy Governor Yoo Sang-dae:
"We will closely monitor market volatility
amid external and domestic uncertainties"

"External risk factors, combined with domestic political and economic conditions, may increase volatility in the domestic financial and foreign exchange markets. We will continue to closely monitor market movements with caution."

Yoo Sang-dae, Deputy Governor of the Bank of Korea, is speaking at the joint press briefing on the plan to promote the CBDC usability test held on the afternoon of the 4th at the Bank of Korea Integrated Annex in Jung-gu, Seoul. Photo by Joint Press Corps

Yoo Sang-dae, Deputy Governor of the Bank of Korea, made these remarks at a meeting reviewing the impact of the U.S. Federal Open Market Committee (FOMC) results on the international financial market situation and the domestic financial and foreign exchange markets. Deputy Governor Yoo said, "Although last night's FOMC results largely met market expectations, Jerome Powell, Chair of the U.S. Federal Reserve (Fed), maintained a cautious stance, stating that economic outlook uncertainty has increased due to U.S. tariff policies and that future monetary policy decisions will be made while observing these effects," adding, "It is expected that external uncertainties such as the future Fed monetary policy path, the U.S. tariff policy implementation, and geopolitical risks in the Middle East and Ukraine will continue."

At this FOMC meeting, the Fed kept the policy interest rate unchanged for the second consecutive time (4.25~4.50%) as expected by the market. In the economic projections (SEP), the growth forecast was lowered while the inflation forecast was revised upward. The dot plot maintained the outlook for two rate cuts per year. In the international financial market, the Fed's reduction in Treasury holdings and Chair Powell's press conference remarks were interpreted as dovish (favoring monetary easing), leading to a decline in U.S. Treasury yields and a rise in stock prices. The U.S. dollar showed a slight strengthening due to the weakness of the euro.