Seoul moves to monitor markets after Fed holds rates

The South Korean government said Thursday it would strengthen its monitoring framework to address uncertainty in external financial markets, after the Federal Open Market Committee held its benchmark interest rate steady.

Lee Hyeong-il, first vice minister of the Ministry of Economy and Finance, convened a joint macroeconomic and financial meeting Thursday morning at the Korea Federation of Banks building. Attending were Bank of Korea Deputy Governor Yoo Sang-dae, Financial Services Commission Vice Chairman Kwon Dae-young and Financial Supervisory Service Capital Markets Deputy Director Hwang Seon-o.

Participants reviewed global financial market developments and the impact on financial and foreign-exchange markets from the Middle East war, following the Federal Reserve's decision to hold its benchmark interest rate at the FOMC meeting in the early hours of Thursday Korean Standard Time. They also discussed how to respond to the evolving situation.

The officials noted that the US economy continues to show solid momentum, with companies sustaining strong growth in capital investment driven largely by AI-related spending.

However, they assessed that uncertainty over the future policy rate path could persist, given that inflation in the United States and Europe remains elevated and instability in the Middle East continues.

In response, participants agreed to closely monitor international financial market developments and their impact on the domestic economy and financial markets, keeping watch on external conditions including major economies' monetary policies, international oil prices and global capital flows.