Deputy Prime Minister and Minister of Economy and Finance Koo Yoon-cheol chaired what is effectively the last expanded macroeconomic financial meeting, urging close cooperation among the economic and financial teams in response to U.S. interest rate hikes. He also expressed gratitude to the heads and staff of related agencies for their collaboration in stabilizing the financial and foreign exchange markets.
On September 17, Koo convened the meeting at the Government Seoul Complex with Bank of Korea Governor Lee Hyun-song, Financial Services Commission Chairman Lee Ok-won, and Financial Supervisory Service Chairman Lee Chan-jin to assess the impact of the Federal Open Market Committee's (FOMC) interest rate hike and the financial and foreign exchange market effects stemming from the ongoing conflict in the Middle East.
Participants noted that the U.S. Federal Reserve raised its policy rate considering robust economic and employment conditions, high inflation, recent increases in international oil prices, and heightened geopolitical uncertainties.
This rate hike had already been factored into the market, and overall financial market conditions remain stable, suggesting limited impact on the market. However, they agreed to monitor the Fed's strengthened commitment to price stability, the possibility of further rate hikes this year, and upcoming monetary policy decisions from the Bank of Japan (BOJ) and the Bank of England (BOE).
The meeting also outlined plans to closely monitor international oil prices and global capital flows, ensuring ongoing assessments of their effects on the domestic financial and foreign exchange markets through inter-agency cooperation.
Regarding the government bond market, they diagnosed that volatility has increased due to changes in domestic and external conditions, including the Fed's rate hike. Given the potential for continued uncertainty, they will keep a close watch on market trends and implement necessary stabilization measures if excessive market concentration occurs.
They also reviewed the repayment burdens on vulnerable borrowers due to rising loan rates. Participants agreed to proceed with previously announced support measures for these borrowers and to develop supplementary plans if necessary.
Recent changes in domestic and external economic conditions, such as the current account surplus, and their impact on market liquidity were also discussed. They plan to examine related capital flows and liquidity conditions while assessing their effects on financial and asset markets.
Koo expressed gratitude to the Bank of Korea, the Financial Services Commission, the Financial Supervisory Service, and other related agencies for their efforts to stabilize the market. He urged the economic and financial teams to continue responding swiftly and organically based on the cooperation framework they have built.
Meanwhile, the National Assembly adopted the confirmation report for Lee Hyung-il, the nominee for Deputy Prime Minister and Minister of Economy and Finance, indicating that this meeting will likely be Koo's last as chair.
* This article has been translated by AI.
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