[Morning Briefing] First Monetary Policy Meeting of Q2 Today... New York Stock Exchange Falls as Tech Stocks Sell Off

◆ First Monetary Policy Meeting of Q2 Today... Likely to Hold Rates Amid Exchange Rate and Household Debt Concerns

The Bank of Korea's Monetary Policy Committee (MPC) will hold its first monetary policy direction meeting of the second quarter on the morning of the 17th to decide whether to adjust the current base rate of 2.75% per annum. Experts predict that the MPC will hold the base rate due to exchange rate concerns. The won-dollar exchange rate rose to around 1,470 won at the end of last month as the announcement of mutual tariffs by the U.S. approached and the impeachment ruling was delayed, reaching 1,484.1 won (as of 3:30 p.m.) when the mutual tariffs took effect on the 9th of this month. This is the highest level in 16 years since March 12, 2009 (1,496.5 won) during the financial crisis. Although it recently fell to the lowest level of 1,420 won this year due to news of tariff deferrals, it is uncertain when it will rise again due to internal and external uncertainties. Governor Changyong Lee and other officials of the Bank of Korea have repeatedly emphasized the need to manage the expansion of volatility rather than a specific level of the exchange rate. Observers expect that the MPC will avoid consecutive cuts to monitor the stability of household loans and Seoul real estate prices, the uncertain size or timing of the supplementary budget, and the pace of rate cuts by the U.S. Federal Reserve (Fed).

◆ New York Stock Exchange Falls as Tech Stocks Sell Off... Nasdaq Down 3%

Major indices on the New York Stock Exchange fell sharply amid concerns expressed by the Fed's chairman over the impact of the Trump administration's strengthened semiconductor export restrictions to China and tariff imposition. On the 16th (Eastern Time), the Dow Jones Industrial Average closed at 39,669.39, down 699.57 points (1.73%) from the previous session. The S&P 500 index fell 120.93 points (2.24%) to 5,275.70, and the Nasdaq Composite Index dropped 516.01 points (3.07%) to close at 16,307.16. The New York Stock Exchange was knocked down by the one-two punch of Nvidia and Powell. The U.S. Department of Commerce announced the previous day that new export permit requirements would apply when exporting Nvidia's H20 chips to China. Following this news, Nvidia expanded its intraday decline to 10.47% before closing at -6.87%. In a public statement, Chairman Powell expressed concern that higher-than-expected tariffs pose a significant risk of prolonged inflation and could put the Fed's dual mandate in conflict. However, he distanced himself from expectations of intervention to curb market volatility, stating that such expectations could be misplaced. Following these remarks, the Nasdaq index, which had been down by 2%, widened its intraday decline to 4.5%.

◆ Medical School Enrollment for Next Year Announced Today... Likely '3,058' Before Increase

The government will announce the adjustment plan for medical school enrollment for the 2026 academic year on the 17th. Next year's medical school enrollment is expected to be 3,058, the size before the increase promised by the government on the premise of the 'full return' of medical students. Deputy Prime Minister and Minister of Education Joo-ho Lee is scheduled to hold a briefing on the '2026 Academic Year Medical School Enrollment Adjustment Direction' at the Government Complex Seoul at 1 p.m. on this day. Minister Lee is expected to announce the final enrollment number of 3,058 before the planned increase of 2,000 students. This follows the government's promise on the 7th of last month to revert to the pre-increase enrollment size if all medical students return by the end of March. Acting President and Prime Minister Han Duck-soo reportedly concluded the enrollment number of 3,058 after meeting with Minister Lee and Minister of Health and Welfare Kyu-hong Cho the previous day. On the same day, the 'Council of Presidents for the Advancement of Medical Colleges' (CPAMC), a meeting of presidents from 40 universities with medical schools, also held an emergency online meeting and agreed to recommend to the government the adjustment of next year's medical school enrollment to 3,058. Once the government decides on next year's medical school enrollment, each university will submit changes to the college entrance examination implementation plan reflecting this to the Korean Council for University Education (KCUE) by the end of this month. The changes to the medical school enrollment plan will be finalized after KCUE approval in May.

◆ Powell: "Tariffs Could Lead to Higher Prices and Lower Growth... Fed May Struggle to Achieve Dual Goals"

Federal Reserve Chairman Jerome Powell warned on the 16th (local time) that higher-than-expected tariffs from the Trump administration could lead to price increases and slower growth, putting the Fed in a difficult position of choosing between focusing on prices or growth. In a speech at the Economic Club of Chicago in Illinois, Chairman Powell diagnosed that "tariffs are likely to cause at least a temporary increase in inflation." He observed that "the level of tariff increases announced by the administration so far is much higher than expected," and that "the impact on the economy is likely to be similar, including rising inflation and slowing growth." He reaffirmed the Fed's existing stance of not considering adjustments to monetary policy, such as lowering the base rate, for the time being and observing the economic situation further. Despite the growing economic uncertainty due to tariffs, the Fed held the base rate steady on March 19, and the market expects the Fed to cut rates by 0.25% points three to four times by the end of the year amid growing recession concerns.

◆ Korean Consortium Exports Research Reactor Design to Nuclear Powerhouse U.S.

A Korean consortium has successfully exported research reactor technology to the United States, a nuclear powerhouse. The Ministry of Science and ICT announced on the 17th that a consortium of the Korea Atomic Energy Research Institute, Hyundai Engineering, and the U.S. firm MPR has signed an initial design contract for the 'Next-Generation Research Reactor Project' commissioned by the University of Missouri through international competitive bidding. This project involves the design of a new high-performance research reactor with a thermal output of 20 MW (megawatts) for the University of Missouri, with the initial design phase analyzing pre-design information such as site conditions and environmental impact assessments. The consortium participated in the bidding for this project and was selected as the final negotiation target in July last year, confirming the initial design contract on this day. The Ministry of Science and ICT plans to strengthen strategies for overseas research reactor expansion in June, supporting △enhancing the strategic export of research reactors △establishing a public-private partnership export base and advancing technology △expanding export opportunities through international cooperation.

◆ People Power Party Holds Presidential Primary Media Day... Candidates to Conduct Interviews and Policy Announcements

The People Power Party will hold a 'Media Day' event at its headquarters in Yeouido on the 17th, with presidential primary candidates participating. Eight candidates, including Moon-soo Kim, Kyung-won Na, Chul-soo Ahn, Hyang-ja Yang, Jung-bok Yoo, Chul-woo Lee, Dong-hoon Han, and Jun-pyo Hong (in alphabetical order), will take an oath for a fair primary at the event. Group assignments for the debates on the 19th and 20th will also be made. Debate groups will be determined by a 'musical chairs' method, where candidates occupy chairs assigned according to the debate topic. Candidates will conduct media interviews and policy announcements before and after the Media Day event. Candidate Moon-soo Kim will hold an opening ceremony for his campaign office in Yeouido on this day. Candidate Jun-pyo Hong will announce policies in the fields of defense, diplomacy, and unification, followed by a live broadcast of a policy debate on economics, labor, and science and technology on his YouTube channel 'TV Hongka Cola.' Candidates Kyung-won Na, Chul-soo Ahn, and Dong-hoon Han will each conduct media interviews.

◆ Daytime Highs of 27 Degrees 'Early Summer Heat'... Light Rain in Inland and Mountainous Areas of Gangwon

On Thursday the 17th, temperatures will rise significantly, making it feel like early summer. However, less than 5 mm of rain is expected in parts of the metropolitan area, Gangwon, and Chungcheong. According to the Korea Meteorological Administration, the morning low temperatures will range from 8 to 15 degrees, and the daytime highs will range from 18 to 27 degrees, 2 to 6 degrees higher than usual. The temperature difference between day and night will be around 15 degrees, especially inland. The nationwide weather will be mostly cloudy, with the metropolitan area and Gangwon-do expected to become gradually cloudy. There will be rain in the metropolitan area, inland and mountainous areas of Gangwon, and Chungnam during the late night of the previous day to the morning of this day. In the inland and mountainous areas of Gangwon, there will be occasional light rain of less than 5 mm from late afternoon to night. In most parts of the country, winds will blow strongly at around 15 m/s. The fine dust concentration will be 'good' to 'moderate' nationwide due to smooth atmospheric diffusion.

Eunji Cha, Hankyung.com reporter chachacha@hankyung.com