US-Korea 'Interest Rate Inversion' Imminent... Economic and Financial Chiefs to Hold 'Emergency High-Level Meeting' on 28th

(From left) Choi Sang-mok, Chief Economic Secretary to the President, Lee Chang-yong, Governor of the Bank of Korea, Choo Kyung-ho, Deputy Prime Minister for Economy, Kim Joo-hyun, Chairman of the Financial Services Commission, and Lee Bok-hyun, Governor of the Financial Supervisory Service, are posing for a commemorative photo at the emergency macroeconomic and financial meeting held on the 24th.
[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Son Seon-hee] Economic and financial leaders will gather on the 28th for an emergency macroeconomic and financial meeting (Emergency Macro-Financial Meeting). It will be the first meeting in four days since the 24th. Since the U.S. Federal Reserve (Fed) is expected to raise the benchmark interest rate again early that day, making the 'interest rate inversion' between Korea and the U.S. a reality, related countermeasures are expected to be discussed.

According to the Ministry of Economy and Finance and the Bank of Korea on the 27th, the Emergency Macro-Financial Meeting will be held at 8 a.m. the next day at the Bankers' Hall in Jung-gu, Seoul, attended by Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho, Financial Services Commission Chairman Kim Joo-hyun, Bank of Korea Governor Lee Chang-yong, Financial Supervisory Service Governor Lee Bok-hyun, and Presidential Office Economic Secretary Choi Sang-mok.

The agenda includes two main items: reviewing the results of the U.S. Federal Open Market Committee (FOMC) regular meeting and international financial market trends, and the impact on financial markets due to the inversion of domestic and foreign interest rates.

According to market forecasts, the U.S. FOMC is expected to take a so-called 'giant step' by raising the benchmark interest rate by 0.75 percentage points at once. As a result, the U.S. benchmark interest rate will rise to 2.25?2.50%, becoming higher than Korea's benchmark interest rate (2.25%) for the first time in about two and a half years since February 2020.

If the Korea-U.S. benchmark interest rates invert, concerns have been raised that foreign capital may rapidly exit domestic stock and bond markets, causing financial markets to fluctuate sharply. In this regard, the government has continuously emphasized its stance that it will actively respond at any time if a sudden financial market concentration phenomenon occurs.

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