The Bank of Korea "Generally in line with expectations of a US giant step... Preparing for increased volatility"

[Asia Economy Reporter Seo So-jung] The Bank of Korea evaluated the Federal Reserve's (Fed) decision at the Federal Open Market Committee (FOMC) to raise the benchmark interest rate by 0.75 percentage points in a 'Giant Step' as largely in line with market expectations.

However, it stated that due to the very high uncertainty surrounding U.S. inflation and monetary policy, preparations must be made for the possibility of increased volatility in global financial markets going forward.

On the morning of the 16th at 8 a.m., the Bank of Korea held a 'Market Situation Review Meeting' chaired by Deputy Governor Lee Seung-heon to assess the international financial market situation following the FOMC results and the potential impact on domestic financial and foreign exchange markets.

Deputy Governor Lee Seung-heon of the Bank of Korea said, "the decision to raise the policy interest rate by 0.75 percentage points at this FOMC meeting is generally evaluated as being in line with market expectations," adding, "the Fed's expression of a firm commitment to price stability in its policy statement is seen as an effort to alleviate market concerns and policy uncertainties regarding the recent rapid rise in inflation."

The Fed, through strengthening its monetary policy stance, removed the phrase expressing expectations to restore the dual goals of full employment and price stability, and instead added wording emphasizing its commitment to restoring the 2% inflation target.

On the same day, Fed Chair Jerome Powell took a somewhat cautious stance regarding the possibility of an additional 0.75 percentage point hike, leading to a decline in interest rates and a rise in stock prices.

Deputy Governor Lee emphasized, "Given the very high uncertainty surrounding U.S. inflation and monetary policy, the possibility of increased volatility in global financial markets remains," adding, "we will closely monitor domestic and international market conditions in preparation for the potential further expansion of volatility in domestic financial and foreign exchange markets, and actively implement additional market stabilization measures in cooperation with the government if necessary."

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