Bank of Korea: "FOMC Decision in Line with Expectations... Monetary Policy Uncertainty Increases"

Market Situation Review Meeting Held Following U.S. FOMC Decision

The Bank of Korea stated that the U.S. Federal Reserve's decision to keep its benchmark interest rate unchanged was largely in line with market expectations, but assessed that uncertainty surrounding the path of the Fed's monetary policy has increased.

The Bank of Korea building.

On the morning of May 8, Yoo Sangdae, Deputy Governor of the Bank of Korea, held a market situation review meeting to assess the impact of the U.S. Federal Open Market Committee (FOMC) decision on international financial markets and domestic financial and foreign exchange markets.

Deputy Governor Yoo said, "Since the FOMC's decision overnight did not deviate significantly from market expectations, international financial markets remained generally stable. However, uncertainty over the Fed's monetary policy path has increased due to changes in global trade conditions."

On May 7 (local time), the Fed concluded its regular FOMC meeting and unanimously decided to keep the benchmark interest rate unchanged at 4.25-4.5% per annum. At a press conference, Fed Chair Jerome Powell emphasized that uncertainty in the economic outlook has increased due to U.S. tariff policies and stated that the Fed would not rush its monetary policy decisions until clear data is confirmed, maintaining a cautious stance.

The Bank of Korea explained, "In international financial markets, the impact of the FOMC decision was relatively limited. However, positive assessments by Chair Powell regarding the U.S. economic situation and news of the start of U.S.-China trade negotiations led to stronger stock prices and a stronger U.S. dollar, while interest rates fell slightly." In the U.S. Treasury market, the yield on the two-year note fell by 0.01% compared to the previous day, and the yield on the ten-year note fell by 0.03 percentage points. In contrast, the U.S. dollar strengthened, with the Dollar Index (DXY) rising by 0.7%. The major stock index S&P 500 also closed slightly higher, up 0.4%.

Deputy Governor Yoo said, "Depending on the future development of U.S. tariff policy, negotiations with major countries, and geopolitical risks, volatility in the financial and foreign exchange markets could increase at any time. We will closely monitor market conditions with a sense of vigilance."