Macroeconomic Financial Meeting Reviews Financial and Foreign Exchange Markets
"Overall Stability Maintained in Financial Markets"
The government has assessed that, in connection with the U.S. Federal Reserve’s decision to lower its benchmark interest rate, the domestic financial market is generally maintaining stability. The stock and bond markets are showing relatively stable trends, and the foreign exchange market has also seen a reduction in volatility, as uncertainties have eased somewhat following the conclusion of tariff negotiations between South Korea and the United States.
On the morning of the 30th, Lee Hyungil, the First Vice Minister of Strategy and Finance, convened a joint “Macroeconomic Financial Meeting” with relevant agencies at the Export-Import Bank of Korea in Yeouido, Seoul. At the meeting, he reviewed the potential impact of the U.S. Federal Open Market Committee (FOMC)’s interest rate cut decision, made earlier that day, on both domestic and international financial and foreign exchange markets. The meeting was attended by Park Jongwoo, Deputy Governor of the Bank of Korea; Ahn Chang-guk, Standing Commissioner of the Financial Services Commission; and Lee Sehoon, Senior Deputy Governor of the Financial Supervisory Service.
At this FOMC meeting, the Federal Reserve decided to lower the benchmark interest rate from the previous range of 4.00-4.25% to 3.75-4.00%, a decrease of 0.25 percentage points. This marks the second interest rate cut since the start of the second Trump administration. The Federal Reserve also announced that it would end its balance sheet reduction (quantitative tightening) policy in December of this year, signaling a shift toward a more accommodative monetary policy stance.
Lee Hyungil, Vice Minister of Strategy and Finance, is presiding over the "Macroeconomic Financial Meeting" held on the morning of the 30th at the Export-Import Bank of Korea in Yeongdeungpo-gu, Seoul, delivering the opening remarks.
In its statement, the Federal Reserve noted, “Since the beginning of this year, employment growth has slowed, and although the unemployment rate has risen slightly, it remains below the level seen in August.” The statement also assessed that “downside risks to employment have increased in recent months.” Furthermore, the Fed highlighted that “uncertainty regarding the economic outlook remains high,” and emphasized its focus on the ‘dual risk factors’ of rising inflation and slowing employment. Federal Reserve Chair Jerome Powell stressed during a press conference, “The decision on interest rates at the next meeting has not been predetermined.”
Global financial markets largely regarded this rate cut as being in line with expectations. However, as the Federal Reserve adopted a cautious stance regarding further rate reductions, U.S. Treasury yields rose and the U.S. dollar strengthened.
Participants in the Macroeconomic Financial Meeting agreed that the domestic financial market is generally maintaining stability. However, they also shared the view that external uncertainties persist, including the potential re-escalation of U.S.-China trade tensions, the prolonged U.S. federal government shutdown, and concerns over a global economic slowdown.
Vice Minister Lee stated, “As external uncertainties persist, we will continue to operate a 24-hour joint monitoring system for financial and foreign exchange markets,” adding, “If necessary, we will respond swiftly and in a timely manner through close cooperation among relevant agencies.”
At this meeting, the government reaffirmed its commitment to closely monitor market conditions and to continuously assess the impact of future U.S. monetary policy directions and changes in global capital flows on the domestic economy.
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