Lee Hyung-il vows emergency bond buybacks if rate surge becomes excessive

Deputy Prime Minister and Minister of Economy and Finance Lee Hyung-il said Tuesday that the government will closely monitor the Treasury bond market and "immediately implement necessary market stabilization measures, including emergency buybacks, if the rise in interest rates becomes excessive."

Lee made the remarks while briefing the Cabinet on the "emergency state affairs management and response status related to the Middle East war" at a Cabinet meeting that day.

Lee assessed that domestic bond yields have continued to rise alongside global interest rates, driven by inflation concerns stemming from higher oil prices, a shift toward monetary tightening in major economies, and fiscal worries.

On the Middle East situation, he said diplomatic efforts — including bilateral talks between the United States and Iran — had taken place, but uncertainty persisted after US President Donald Trump rejected Iran's truce proposal, keeping international oil prices fluctuating in the $90–$100 per barrel range. International natural gas and coal prices also remain elevated, he added.

Despite these headwinds, Lee said South Korea's growth outlook has been revised upward. "Despite the continued uncertainty from the Middle East war, the OECD has projected South Korea's economic growth rate this year at 3.7 percent — the largest upward revision among G20 nations," he said.

The government will also strengthen crude oil supply management in response to Middle East uncertainty. "Ninety percent of crude oil needs for September and October have been secured compared with last year, and more than 70 percent is planned to be secured for November," Lee said, adding that the government would continue to pursue supply measures such as sourcing alternative volumes and promoting the use of alternative shipping routes.

On price management, Lee said the government would "make stabilizing everyday prices the top priority" through measures including price caps, fuel tax cuts, stronger management of agricultural and fishery supply, and improvements to retail distribution structures. He added that efforts to root out unfair practices and ease the burden on vulnerable groups would continue.

The government will also follow up on economic MOUs signed during the president's overseas trip. "Of the 94 agreements concluded during the president's visits to Central Asia and Mexico, 54 were in the economic sector," Lee said. "Across all 22 countries visited to date, 163 economic MOUs have been signed."

"If these are faithfully implemented, they will translate into contracts, exports and investment — opening doors for Korean companies and becoming a driver of growth," he said. He added that the government conducted a first review in June and would conduct another in October, working across all ministries to ensure the MOUs are carried out without setbacks and to resolve any difficulties that arise.

Attending his first Cabinet meeting since taking office, Lee also pledged to lead efforts to address inequality.

"South Korea is showing remarkable economic growth, driven in part by semiconductors and other industries, but the issue of inequality still weighs heavily on my mind," he said. "As the president has said, I will stand at the forefront of efforts to resolve inequality, focusing on housing, jobs and financial services for ordinary people, and will do my utmost."