Fears of additional Fed rate hikes have eased, says BOK
Published: 02 Nov. 2023, 18:00
- JIN MIN-JI
- jin.minji@joongang.co.kr
“The policy rate remained unchanged, in the 5.25 percent to 5.5 percent range, during the Federal Open Market Committee (FOMC) meeting, as was expected by the market,” the BOK said in a statement.
The FOMC statement and Fed Chairman Jerome Powell's news conference remarks were interpreted to be “dovish,” the Korean central bank added.
“Fears of additional rate increases have been partially eased as tighter financial conditions were said to be considered following a surge in Treasury yields,” said Lee Sang-hyeong, deputy governor at the BOK, in a meeting with other BOK officials following the Fed’s rate decision.
“But Chairman Powell’s consistent expression on the need to maintain restrictive tone to reach target inflation should be noted,” Lee added.
In the post-meeting press conference, Powell said that the committee is focused on the question of whether “we achieved a stance of monetary policy that’s sufficiently restrictive to bring inflation down to 2 percent over time sustainably.”
He added, “The committee’s not thinking about rate cuts right now at all. We’re not talking about rate cuts.”
The government and the BOK will execute a contingency plan to stabilize the market when necessary, said the Ministry of Economy and Finance.
The BOK said it will thoroughly monitor the impacts of extended restrictive monetary policy, as well as development of the Israel-Hamas war, on global financial and foreign exchange markets.
The U.S. central bank voted unanimously to hold its policy rate at its current 22-year high on Wednesday. Interest rates for mortgages and other loans are at their highest in decades.
The BOK kept its own rate unchanged at 3.50 percent last month for the sixth consecutive meeting, citing high household debt, economic slowdown and uncertainties caused by geopolitical tensions.
One of the seven Monetary Policy Board members said that the bonk should be flexible in either raising or lowering the policy rate, considering uncertainties.
The BOK’s next rate-setting meeting is scheduled to take place on Nov. 30.
The Kospi rose 1.81 percent, and Kosdaq rose 4.55 percent on Thursday.
BY JIN MIN-JI [jin.minji@joongang.co.kr]
with the Korea JoongAng Daily
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