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Finance minister warns of short-term market volatility following U.S. rate cut

Published: 19 Dec. 2024, 10:54

Minister of Economy and Finance Choi Sang-mok, front right, and Bank of Korea Gov. Rhee Chang-yong enter a meeting room for an emergency meeting on macroeconomic and financial issues in central Seoul on Dec. 19. [YONHAP]

Finance Minister Choi Sang-mok on Thursday forecast heightened volatility in Korea's financial and foreign exchange markets in the short term following the U.S. Federal Reserve's latest rate cut.

The Federal Open Market Committee concluded its two-day meeting Wednesday by lowering its benchmark interest rate by a quarter percentage point to a range of 4.25 to 4.50 percent. It followed a quarter-percentage-point cut last month and a 50-basis-point reduction in September.

"With major global currencies showing significant weakness, we expect increased volatility in our financial and foreign exchange markets in the short term," Choi said.

The minister made the remarks during an emergency meeting with Bank of Korea Gov. Rhee Chang-yong and other top financial officials, which has been held on a regular basis to discuss ways of minimizing the economic impacts of President Yoon Suk Yeol's short-lived imposition of martial law on Dec. 3.

Choi also cautioned against overreaction, saying that excessive tilts in one direction may lead to sharp counter-movements in the opposite direction.

"If market volatility becomes excessive, we will take swift and bold action to implement additional stabilization measures," he added.

U.S. Fed Chair Jerome Powell, meanwhile, signaled the possibility of two reductions next year, two fewer than what the U.S. Fed penciled in three months ago.

Yonhap