Government: "U.S. Rate Hike Increases Government Bond Market Volatility... Will Implement Stabilization Measures if Excessive Concentration Occurs"

Expanded Macroeconomic and Financial Meeting Held

"Supplementary Support Measures for Vulnerable Borrowers Will Be Prepared If Needed"

Koo Yoon-chul, Deputy Prime Minister and Minister of Strategy and Finance, is taking a commemorative photo with participants before the start of the expanded macroeconomic financial meeting held at the Government Complex Seoul in Jongno-gu, Seoul on the 17th. From left to right: Lee Chan-jin, Governor of the Financial Supervisory Service; Deputy Prime Minister Koo; Shin Hyun-song, Governor of the Bank of Korea; Lee Eok-won, Chairman of the Financial Services Commission. Ministry of Strategy and Finance

The government assessed that volatility in the government bond market is increasing due to changes in domestic and international conditions, such as the U.S. policy rate hike, and announced that it will implement necessary market stabilization measures if excessive market concentration occurs.

On the morning of September 17, Koo Yoon-chul, Deputy Prime Minister and Minister of Strategy and Finance, stated at the "Expanded Macroeconomic and Financial Meeting" held jointly with related agencies at the Government Complex Seoul, "As domestic and external uncertainties are expected to persist, we will closely monitor the trends in the government bond market," adding these remarks.

He also said, "We will review the recent upward trend in lending rates and, while paying close attention to the possibility that the burden on vulnerable borrowers could intensify due to higher rates, we will implement previously announced support measures for vulnerable borrowers without disruption. Additionally, if necessary, we will prepare supplementary measures."

During the meeting, which was attended by Shin Hyun-song, Governor of the Bank of Korea; Lee Eok-won, Chairman of the Financial Services Commission; and Lee Chan-jin, Governor of the Financial Supervisory Service, participants reviewed the trends in the global financial market following the U.S. interest rate hike, as well as the impact of the Middle East war on financial and foreign exchange markets, and discussed response directions.

Overnight, the U.S. Federal Open Market Committee (FOMC) raised its benchmark interest rate by 0.25 percentage points from 3.75% to 4.00%, resuming rate hikes for the first time in three years. The dot plot suggested one more increase within the year.

Despite the hawkish FOMC, the KOSPI started with a modest increase, rising to the 6,780 range in early trading. On the Seoul foreign exchange market, the won-dollar exchange rate opened at 1,377 won and peaked at 1,379.5 won around 9 a.m.

Participants evaluated, "The U.S. raised its policy rate in consideration of a robust economy and employment environment, persistently high prices, the recent rise in international oil prices, as well as heightened geopolitical uncertainties." They also commented, "This rate hike has already been priced into the market, and overall financial market conditions remain stable, so the impact of this hike is expected to be limited."

Meanwhile, participants agreed to closely monitor the strong determination for price stability, the possibility of another rate hike within the year, and the upcoming monetary policy decisions of the Bank of Japan (BOJ) and the Bank of England (BOE) this week. They also decided to closely monitor international oil prices and global capital flows, and to collaboratively review the impact on Korea's financial and foreign exchange markets through close cooperation between relevant agencies.

This content was produced with the assistance of AI translation services.