Lee Hyungil, Vice Minister of Strategy and Finance, is delivering opening remarks at the Macroeconomic and Financial Meeting held at the Bankers' Hall in Jung-gu, Seoul on the morning of the 31st. (Source: Ministry of Strategy and Finance)
The government stated that the U.S. Federal Open Market Committee (FOMC)'s decision to keep the policy rate unchanged was within expectations and announced that it would continue to monitor financial market volatility.
On the morning of July 31, First Vice Minister of Economy and Finance Lee Hyungil held a joint macroeconomic and financial meeting with related agencies at the Korea Federation of Banks building in Seoul to review the impact of the U.S. interest rate decision on domestic and international financial and foreign exchange markets. The meeting was attended by Yoo Sangdae, Deputy Governor of the Bank of Korea; Lee Hyungjoo, Standing Commissioner of the Financial Services Commission; and Lee Sehun, Senior Deputy Governor of the Financial Supervisory Service.
At the FOMC meeting held overnight, the policy rate was maintained at 4.25% to 4.50%. Jerome Powell, Chair of the Federal Reserve, cited eased financial conditions, low unemployment, and inflation exceeding the target level as reasons for the decision to hold rates. He also assessed that the current monetary policy is "modestly restrictive" (the same as in June) and stated that the Fed is in a good position to respond in a timely manner. He further judged that the policy is not inappropriately restrictive for the economy.
The government explained that global financial markets generally viewed this decision as expected. However, in response to Chair Powell's cautious stance?which contrasted with market expectations for a possible rate cut at the upcoming September FOMC meeting?U.S. Treasury yields rose and the dollar strengthened.
Vice Minister Lee stated, "Recently, stock and bond markets have shown a generally stable trend." However, he emphasized, "Given the persistent external uncertainties such as the economic trends of major countries and U.S. monetary and trade policies, it is necessary to remain vigilant and closely monitor market volatility."
He also requested, "Please continue the 24-hour joint monitoring system for financial and foreign exchange markets, and, if necessary, respond promptly in close coordination with relevant agencies according to contingency plans for each situation."
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