Fed’s overnight rate hike eases financial market concerns, Choo says

Finance Minister Choo Kyung-ho, second from the right, at the emergency macroeconomic and financial meeting held in Seoul [Photo by Han Joo-hyung]

South Korea’s Finance Minister Choo Kyung-ho Thursday said that concerns in the international financial market are easing as the U.S. Federal Reserves slowed its pace of rate hikes overnight with a quarter percentage point increase as anticipated.

Fed officials repeated language that “ongoing increases in the interest rate target range will be appropriate” but the Federal Reserve Chair Jerome Powell said that “we can now say I think for the first time that the disinflationary process has started.”

“Powell’s comments are understood to mean market uncertainties are somewhat eased,” Choo said during an emergency macroeconomic and financial meeting held in Seoul.

Regarding the domestic financial market, Choo said that volatility has eased this year thanks to the government’s efforts to stabilize the market and expectations that tightening measures in major countries will slow.

“But the government must remain alert as uncertainties surrounding the domestic market still persist due to sluggish exports and inflation that is expected to remain high for some time being,” he added.

“The ministry’s economics and finance teams will strengthen market monitoring under close cooperation and respond in a timely manner according to the contingency plan for each sector, while further elaborating the optimal policy mix,” he emphasized.

Choo also said that the government will enhance the stability of the domestic financial market and manage risks in the real estate sector.