Fed pivot allows Korea focus on economy, stability: BOK

Deputy Governor of the Bank of Korea, Ryoo Sang-dae, is speaking. (Yonhap)

Bank of Korea Deputy Governor Ryoo Sang-dae said on Thursday that he expects “the pivot in U.S. monetary policy will have a positive effect on reducing volatility in the foreign exchange market and increase the flexibility for the central bank to conduct monetary policy with a focus on domestic economic conditions, inflation, and financial stability.”

Ryoo made these remarks during a meeting on early Thursday to review the market situation following the results of the Federal Open Market Committee (FOMC) meeting in the United States.

“Major countries’ monetary policies could become more differentiated depending on their respective conditions. The volatility of price variables could also increase due to geopolitical risks such as the U.S. presidential election and the situation in the Middle East,” he added.

The U.S. Federal Reserve lowered its target range for the policy rate (benchmark interest rate) by half a percentage point to 4.75-5.0 percent from 5.25 to 5.50 percent at its FOMC meeting on Tuesday and Wednesday local time.

The U.S. central bank’s rate cut is its first since March 2020, during the Covid-19 pandemic, and marked a shift in U.S. monetary policy from tightening to easing for the first time in about four and a half years.

The Fed’s decision is expected to have a significant impact on the global economy and financial markets.