Fed’s dovish stance may stabilize market: BOK

The chief of Korea’s central bank said Thursday the U.S. Federal Reserve took a more dovish stance than expected, which is expected to help stabilize the financial market.

Bank of Korea (BOK) Gov. Lee Ju-yeol made the comments when asked by reporters about his assessment of the latest developments in U.S. monetary policy.

On Wednesday, U.S. Fed Chairman Jerome Powell made a quick about-face and signaled a pause in its rate hikes, leaving key interest rates unchanged at 2.25 percent to 2.50 percent, as widely expected.

“Noteworthy is that the Fed said it would be ‘patient’ in future adjustments and flexible in scaling back its balance sheet in accordance with future economic conditions,” Lee said.

Pointing out the Fed did not present its assessments of economic risks on this occasion, the governor said current economic uncertainties appear to be influencing the wait-and-see posture.

“The accommodative view is expected to help stabilize the financial market, and the Fed’s changes will affect Korea’s future monetary policy, as well as that of many of other global countries,” Lee noted.

Last year, the United States raised rates four times, including once in December, and signaled it would do so twice more this year. The BOK raised its policy rate by 0.25 percent to 1.75 percent in November last year, the first rise in a year.

Yonhap