The Bank of Korea: "FOMC Slightly Hawkish... Caution on Increased Market Volatility"

by Park Jaehyun

Published 13 Jun.2024 09:42(KST)

Updated 13 Jun.2024 09:56(KST)

The Bank of Korea to Hold 'Market Situation Review Meeting' on the 13th Regarding US FOMC

Bank of Korea. [Photo by Yonhap News]

The Bank of Korea evaluated that the U.S. Federal Open Market Committee (FOMC) was more hawkish than initially expected by the market. It urged caution as market volatility could frequently increase during future U.S. interest rate cut decisions.

On the 13th, the Bank of Korea held a market situation review meeting at its headquarters in Jung-gu, Seoul, chaired by Deputy Governor Park Jong-woo, and assessed the FOMC meeting results, stating that "the year-end policy rate forecast was raised by 0.5 percentage points (50bp), indicating a somewhat more hawkish stance than market expectations."

Earlier, the U.S. Federal Reserve (Fed) kept the benchmark interest rate unchanged at 5.25?5.50% for the seventh consecutive time on the 13th (local time). The May Consumer Price Index (CPI) rose 3.3% year-on-year, falling short of the market forecast of 3.4%.

Deputy Governor Park evaluated at the meeting that "Chairman Powell positively assessed today's CPI results but maintained a cautious stance, stating that additional confidence in disinflation is necessary for rate cuts and that the pace may be slower than expected."

He added, "The Fed is expected to determine the timing and extent of rate cuts based on upcoming data," and "Given the possibility of frequent market volatility depending on movements in key indicators such as inflation and employment, we will continue to closely monitor domestic and international financial and foreign exchange market conditions with caution."