BOK Says Uncertainty Over Fed Policy, Middle East Tensions Has Increased

The Bank of Korea held a market review meeting on the morning of July 30, chaired by Deputy Governor Park Jong-woo, to assess the outcome of the Federal Open Market Committee meeting, moves in global financial markets and the impact on South Korea’s financial and foreign-exchange markets.

The Federal Reserve kept its benchmark interest rate unchanged at 3.50% to 3.75% at the July 28-29 FOMC meeting. Still, three of the 12 committee members argued for a 0.25 percentage-point increase.

Park said Fed Chair Kevin Warsh expressed his commitment to price stability at the post-meeting press conference, but did not provide a specific signal on the future policy path.

As a result, uncertainty in financial markets over the Fed’s monetary policy stance and the outlook for inflation has increased, he added, driving a sharp rise in long-term bond yields.

Park said uncertainty over US monetary policy and the situation in the Middle East had widened as anxiety in South Korea’s financial markets was already growing on concerns about a slowdown in artificial intelligence investment.

The central bank will continue to closely monitor domestic and external risk factors and their impact on South Korea’s financial markets and economy, he said.

Kim Yeon-ji, Hankyung.com reporter kongzi@hankyung.com