Choo Kyung-ho: "Uncertainty Will Persist for a While... Actively Managing Short-Term Volatility"

Emergency Macroeconomic and Financial Meeting

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho and heads of financial authorities are taking a commemorative photo before the Emergency Macroeconomic Financial Meeting held at the Bankers' Hall in Jung-gu, Seoul on the morning of the 22nd. From the left, Lee Chang-yong, Governor of the Bank of Korea; Deputy Prime Minister Choo; Kim Ju-hyun, Chairman of the Financial Services Commission; Lee Bok-hyun, Governor of the Financial Supervisory Service. 2022.9.22 Photo by Yonhap News

[Asia Economy Sejong=Reporter Son Seon-hee] Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho said on the 22nd, "High uncertainty may continue globally for some time," adding, "We will actively manage volatility in the short term."

Deputy Prime Minister Choo held an 'Emergency Macroeconomic and Financial Meeting' on the morning of the same day at the Bankers' Hall in Jung-gu, Seoul, stating, "We will proactively review scenarios and response measures for major potential risks to ensure swift and effective responses under any circumstances." The meeting was attended by financial authorities including Deputy Prime Minister Choo, Bank of Korea Governor Lee Chang-yong, Financial Services Commission Chairman Kim Ju-hyun, and Financial Supervisory Service Governor Lee Bok-hyun.

Deputy Prime Minister Choo said, "The economic team, including the Ministry of Economy and Finance, Bank of Korea, Financial Services Commission, and Financial Supervisory Service, will respond to the current situation with close cooperation while maintaining a 'broad and long-term perspective'." He added, "We intend to seek the 'optimal policy mix' keeping in mind the trends beyond next year." This remark appears to reflect the possibility of a prolonged high-intensity tightening in the U.S., following Federal Reserve Chair Jerome Powell's strong indication on the 21st (local time) that the rate hike stance will be maintained until inflation is firmly controlled.

The U.S. Federal Reserve raised the benchmark interest rate by 0.75 percentage points after the Federal Open Market Committee (FOMC) regular meeting. This marks the third consecutive 0.75 percentage point rate hike following June and July, and the benchmark interest rates of Korea (2.50%) and the U.S. (3.00?3.25%) have reversed again.

Deputy Prime Minister Choo evaluated, "Volatility in the international financial markets somewhat expanded early this morning as the Fed's future tightening path exceeded initial market expectations and growth forecasts were sharply revised downward." He added, "Currently, the economic team is closely examining the impacts on financial and foreign exchange markets and the real economy under various scenarios such as the Fed's high-intensity tightening, accelerated economic slowdown in China, and rising risks in emerging markets, while monitoring key indicators that can detect crisis signs in real time." He emphasized, "Based on past economic and financial crisis policy response experiences, we have comprehensively and systematically prepared available policy tools for rapid deployment and will implement timely market stabilization measures by sector and stage if necessary."

In particular, regarding the won-dollar exchange rate approaching 1,400 won, Deputy Prime Minister Choo stated, "We will meticulously manage detailed factors affecting price variables behind the exchange rate level," and "We will take multifaceted response measures tailored to market conditions to alleviate foreign exchange supply-demand imbalances, such as overseas investment flows by domestic residents including pension funds, and resolving foreign currency funding difficulties of export and import companies."

He also said, "Regarding the domestic bond market with increased volatility, the government and the Bank of Korea will actively consider possible measures through policy coordination to stabilize the market, while simultaneously working to expand the demand base for government bonds, including inclusion in the World Government Bond Index (WGBI) and introduction of government bonds for individual investors."

Deputy Prime Minister Choo added, "To ensure that the current account balance, a major external indicator of our economy, maintains a stable trend in the future, we will accelerate efforts to boost export vitality and enhance competitiveness in service industries such as tourism and content, while promptly preparing and implementing energy-saving and efficiency improvement measures to reduce energy import volumes."

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