BOK: "U.S.-Korea tariff agreement expected to reduce uncertainty"

Korea Economic Daily

Summary

The Bank of Korea announced that it expects uncertainty to decrease as a result of the conclusion of Korea-U.S. trade negotiations.
In this negotiation, the tariff rate was lowered from 25% to 15% and a commitment of $350 billion in investment in the United States was made.
The Bank of Korea emphasized the need to closely monitor ongoing uncertainty regarding the Fed’s rate cut path and changes in global trade conditions.

On the 31st, the Bank of Korea announced, in connection with the conclusion of Korea-U.S. trade negotiations, that "uncertainty is expected to decrease."

Sangdae Yoo, Deputy Governor of the BOK, held a market monitoring meeting on this day with Changho Choi, Director General of the Monetary Policy Department, Kyungsu Yoon, Director General of the International Department, and Yonghoon Choi, Director General of the Financial Markets Department, and noted that "the Korea-U.S. trade negotiations were concluded at a tariff rate (15%) similar to those of other major countries."

On this day, the government also announced an agreement to reduce reciprocal tariffs on Korea from 25% to 15%, along with a commitment of $350 billion in investment in the United States. The agreement was reached dramatically just one day before the scheduled date for tariff imposition on the 1st of next month.

However, Deputy Governor Yoo added that it would be necessary to watch the negotiation processes of other countries as well. He stated, "Since trade negotiations among major countries such as the U.S. and China are ongoing, we will continue to carefully monitor how changes in global trade conditions affect various sectors of the domestic economy and the financial and FX markets."

They also reviewed the market trends related to the outcome of the Federal Reserve (Fed) Federal Open Market Committee (FOMC) meeting. The Fed kept the policy rate steady at 4.25~4.50% per year on the 30th (local time). Although two Fed board members dissented, giving the meeting a dovish tone, the market shifted to a more hawkish view after Jerome Powell, the Fed Chair, mentioned inflation frequently in the subsequent press conference. U.S. Treasury yields and the dollar rose, while stocks shifted to a decline.

Deputy Governor Yoo said, "While the Fed's assessment of the economy was revised downward and minority opinions were raised, Chair Powell maintained a cautious stance on further rate cuts," adding, "Uncertainties about the path of the Fed's rate cuts are assessed to remain."

Reporter Jinkyu Kang josep@hankyung.com