Fed holds rates steady as Korea remains wary of possible volatility

U.S. Federal Reserve Chair Jerome Powell holds a press conference following a two-day meeting of the Federal Open Market Committee on interest rate policy in Washington on Wednesday. [REUTERS/YONHAP]

As the U.S. Federal Reserve kept interest rates at 5.25 percent to 5.50 percent for the sixth straight meeting, the market response indicated that traders perceived the Fed’s stance to be “dovish in general,” the Bank of Korea said Thursday in a release.

With the Fed signaling a further delay in rate cuts this year, the possibility of another rate freeze by the central bank later this month increased.

The Bank of Korea expected that "the Fed will maintain the target rate at the current level for a longer period of time, and continue to monitor incoming data to decide on the timing and the frequency of rate cuts."

Meanwhile, Korea’s Finance Ministry provided assurances that the overall market outlook remains stable at home, yet pledged to stay vigilant for possible volatility following the Federal Reserve’s May meeting.

The Ministry of Economy and Finance held an emergency meeting on macro economy on Thursday, chaired by Choi Sang-mok, deputy prime minister and economy minister, who is currently on his visit to Turkey ahead of the upcoming ASEAN+3 Finance and Central Bank Deputies’ Meeting in Tbilisi, Georgia.

The ministry assessed the short-term global market situation to be relatively stable, but noted that “the possibility of a volatility increase cannot be ruled out due to potential risks in the Middle East amid persisting uncertainties regarding rate cut decisions from major economies,” adding that the ministry will closely work with relative government agencies to address the situation.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]