The South Korean government has assessed that the uncertainty surrounding future monetary policy may continue due to high inflation in major countries and instability in the Middle East, despite the U.S. Federal Reserve's decision to hold interest rates in July.
Lee Hyung-il, First Deputy Minister of the Ministry of Economy and Finance, convened a joint macroeconomic and financial meeting on July 30 at the Bankers Association building in Seoul to review the financial market impacts following the Federal Open Market Committee's (FOMC) decision to maintain interest rates. The meeting included participants such as Yoo Sang-dae, Deputy Governor of the Bank of Korea, Kwon Dae-young, Vice Chairman of the Financial Services Commission, and Hwang Seon-oh, Director of the Capital Markets Division at the Financial Supervisory Service.
Participants noted that while the Federal Reserve has kept interest rates steady, the U.S. economy continues to show solid performance. They highlighted the strong growth in capital investment by U.S. companies, particularly in artificial intelligence (AI) related sectors.
However, they also expressed concerns that inflation remains high in both the U.S. and Europe, and ongoing geopolitical tensions due to conflicts in the Middle East could lead to continued uncertainty regarding future policy interest rates.
Fluctuations in international oil prices and the flow of global investment funds, influenced by changes in the Middle East, were identified as significant risk factors that could increase volatility in domestic financial and foreign exchange markets.
In response, the government and relevant agencies have decided to closely monitor external conditions, including major countries' monetary policies, international oil prices, and global capital flows, while continuously assessing the impact of international financial market trends and external variables on the domestic economy and financial markets.
* This article has been translated by AI.
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