On June 18, Deputy Prime Minister and Minister of Finance and Economy Koo Yun Cheol convened an Expanded Meeting on Macroeconomic and Financial Stability with relevant agencies at the Government Complex Seoul to review global financial market developments following the U.S. Federal Open Market Committee’s (FOMC) decision earlier today (Korea time) to keep its policy rate unchanged, as well as financial and foreign exchange (FX) market developments related to the conflict in the Middle East, and to discuss policy responses.

Participants noted that, while the Federal Reserve kept its policy rate unchanged as widely expected by the market, the Fed’s commitment to price stability was emphasized at the first FOMC meeting chaired by Chair Kevin Warsh. They assessed that U.S. monetary policy could therefore evolve in a more hawkish direction going forward. In addition, recent policy rate increases by major central banks, including the Bank of Japan (BOJ) and the European Central Bank (ECB) ahead of the FOMC meeting, underscore the need for a close assessment of their potential impact on the macroeconomy and financial markets. In particular, participants agreed to develop measures to ease the burden on vulnerable sectors arising from higher domestic market interest rates and to strengthen support for vulnerable borrowers.

Participants pointed out that the recent announcement of a ceasefire agreement between the United States and Iran is expected to have a positive impact on the financial and FX markets. At the same time, close monitoring of the details of the agreement and its implementation will continue, while market conditions will be monitored on a round-the-clock basis and every effort will be made to preserve market stability.

Last but not least, participants agreed to fully implement an integrated risk monitoring framework encompassing the equity, bond, FX, and real estate markets, in recognition of the increasing interconnectedness among sectors amid evolving financial market conditions. Through this framework, they will systematically assess sector-specific risks and their potential spillover effects and take appropriate policy responses.

Please refer to the attached files.