Bank of Korea "Financial Market Volatility Expands... Additional Treasury Bond Purchases Needed"

The Bank of Korea announced on the 11th that it held a situation review meeting chaired by Deputy Governor Lee Seung-heon to assess the U.S. Treasury market situation and discuss its potential impact on the domestic financial and foreign exchange markets.

At the meeting, Deputy Governor Lee stated, "With the acceleration of monetary policy normalization in major countries expected, uncertainties in the international financial markets have increased, which could also expand volatility in the domestic financial markets." He urged, "Relevant departments should review emergency plans and be fully prepared to promptly implement necessary market stabilization measures if the financial markets experience excessive volatility."

In the U.S., consumer prices exceeded market expectations last month, causing Treasury yields to surge and stock prices to fall. The U.S. consumer price inflation rate rose 7.5% year-on-year, marking the largest increase in about 40 years since February 1982.

Immediately after the announcement, James Bullard, President of the Federal Reserve Bank of St. Louis, expressed a hawkish stance by stating that interest rates need to be raised by 1 percentage point by July to counter inflation, further driving up U.S. Treasury yields.

Deputy Governor Lee said, "Depending on market conditions, it may be necessary to take market stabilization measures such as additional simple purchases of government bonds and adjusting the monthly issuance volume of Monetary Stabilization Bonds (MSBs)."

This content was produced with the assistance of AI translation services.