Aju Press - Asia News Hub

Journalist

Kim Yeon-jae김연재

ReporterBank of Korea & Market, Macroeconomics

Kim Yeon-jae is a journalist at AJU Press (AJP's English platform),
covering macroeconomics, international finance, and geopolitics.
He closely tracks central bank monetary policies, global energy supply chains,
and the Korean defense industry. "Peering into the risks behind the euphoria."

Latest by Kim Yeon-jae

World Cup 26: Korea's fate hinges on match with South Africa SEOUL, June 19 (AJP) - South Korea's 1-0 defeat to Mexico was not fatal. But it exposed a weakness that Hong Myung-bo's side must fix quickly: when opponents shut down Lee Kang-in and Hwang In-beom, Korea struggles to build attacks and loses its identity. That makes next week's match against South Africa a de facto knockout game. South Korea fell 1-0 to Mexico in their second Group A match of the 2026 FIFA World Cup on Friday morning (Korea time) after Luis Romo capitalized on a spilled ball early in the second half. Mexico moved to six points and became the first of the tournament's 48 teams to secure a place in the Round of 32. South Korea remained on three points and second place, but with little room for error. The equation is simple. A draw against South Africa will guarantee second place regardless of Czechia's result against Mexico. Even if Czechia beat a potentially rotated Mexican side, South Korea would hold the head-to-head advantage from their opening 2-1 victory. A defeat, however, could end their campaign. If Czechia beat Mexico and South Africa upset Korea, Hong's side would tumble to the bottom of Group A and be eliminated. Even if Czechia fail to win, Korea could be forced into the uncertain route of advancing as one of the best third-placed teams. More importantly, Mexico offered future opponents a tactical blueprint. Javier Aguirre's side systematically suffocated Korea's buildup by crowding Lee Kang-in and Hwang In-beom and cutting off passing lanes into Son Heung-min. The most revealing moment came from television footage showing Lee Gi-hyuk appearing to say, "There's no one to pass to." That summarized the match. South Korea managed just one shot on target and repeatedly fell into Mexico's offside traps. When Hong introduced more attackers in the second half, he gained pace but lost control of midfield, allowing Mexico to threaten continuously on the counterattack. The concern is predictability. Two games into the tournament, opponents have identified Korea's pressure point: disrupt central buildup and force play wide. South Africa will present a different challenge. Unlike Mexico, they are unlikely to press relentlessly. Instead, they will probably defend deeper and wait for transition opportunities. That shifts the burden onto South Korea. Against Mexico, Korea had to survive. Against South Africa, they will have to create. The next match will determine more than whether Korea reaches the Round of 32. It will show whether this team can adjust over the course of a tournament. Because after Mexico, South Korea's World Cup is no longer about chasing first place. It is about avoiding an early exit. 2026-06-19 14:02:49
World Cup 26: Korea falls to Mexico after second-half error SEOUL, June 19 (AJP) - South Korea lost 1-0 to Mexico in their second Group A match at the 2026 FIFA World Cup on Friday morning in Korea, leaving their knockout-stage fate to the final group match against South Africa. Mexico scored the only goal early in the second half, when Luis Romo reacted first after goalkeeper Kim Seung-gyu failed to hold the ball inside the box. South Korea must beat South Africa in their final group match to guarantee a top-two finish in Group A, while a draw would leave them depending on tiebreakers or the third-placed team ranking. 2026-06-19 12:05:39
World Cup 26: Korea hold Mexico scoreless at halftime SEOUL, June 19 (AJP) - South Korea and Mexico were locked at 0-0 at halftime in their Group A match at the 2026 FIFA World Cup on Friday morning in Korea, with both sides pressing aggressively but struggling to create clear chances. The match kicked off at Guadalajara Stadium in Zapopan, Mexico, at 10 a.m. Friday in Korea, or 9 p.m. Thursday local time. South Korea started with Kim Seung-gyu in goal, with Lee Han-beom, Kim Min-jae, Kim Moon-hwan, Lee Gi-hyuk and Seol Young-woo across the defensive line. Hwang In-beom, Paik Seung-ho, Lee Jae-sung and Lee Kang-in started in midfield, with captain Son Heung-min leading the attack. Head coach Hong Myung-bo made one change from the team that beat Czechia 2-1 in the opening match, bringing in Kim Moon-hwan for Lee Tae-seok while keeping the rest of the lineup intact. Mexico started Raul Rangel in goal, with Jorge Sanchez, Edson Alvarez, Johan Vasquez and Jesus Gallardo in defense. Luis Romo, Erik Lira, Brian Gutierrez and Roberto Alvarado started in midfield, with Raul Jimenez and Julian Quinones up front. Mexico made three changes from their 2-0 win over South Africa. Alvarez dropped into central defense to replace suspended center back Cesar Montes, Jorge Sanchez came in at right back and Romo replaced Alvaro Fidalgo in midfield. South Korea began the match with a high press, trying to unsettle Mexico’s buildup from the opening minutes. But the early intensity quickly brought risk. Lee Kang-in was booked in the third minute after stepping on an opponent’s foot. Mexico then grew into the match through physical pressure and a faster tempo, especially around South Korea’s central and right-sided buildup channels, where Hwang In-beom and Lee Kang-in were repeatedly closed down. The home side’s pressure made it difficult for South Korea to play smoothly through midfield, forcing the Taegeuk Warriors to look more often for space behind Mexico’s back line. South Korea nearly found that space in the 15th minute of the half, when Son lifted a ball toward goal that was cleared before crossing the line, though the offside flag went up. Mexico responded around the 19th minute, when Quinones met a header inside the box, but Kim Seung-gyu made the save after South Korea’s defenders had done enough to prevent a cleaner effort. South Korea continued to look for quick runs behind Mexico’s defense, with Lee Jae-sung flagged offside after making a sharp run in the 29th minute. The first official South Korean shot came around the 40th minute, when a pass from Son was deflected into Seol Young-woo’s path, but the wingback mishit his effort. Lee Jae-sung also tried to attack a cross near the end of the half, but the move broke down before South Korea could get a shot away. The first half left South Korea with defensive resilience but little rhythm in attack. Mexico had more physical control and pressed with greater force, but they also failed to turn their territorial pressure into a breakthrough. With Czechia and South Africa drawing 1-1 earlier in Group A, South Korea would secure top spot with a win over Mexico, while a draw would keep them in control before the final group match against South Africa. 2026-06-19 10:59:27
Korea's producer prices spike at fastest pace since pandemic SEOUL, June 19 (AJP) -Korea's producer price spiked 8.5 percent from a year earlier in May, the fastest annual increase since the pandemic peak in the summer of 2022, as oil shocks from the Gulf crisis hit the energy-dependent economy in full force and flagged upside risks for consumer inflation ahead, central bank data showed Friday. The figures underscore that supply-driven inflation is no longer just an oil story. The spring energy shock has cooled on a monthly basis, but price pressures are continuing to spread broadly across the industrial front. According to the Bank of Korea, the producer price index rose 0.8 percent from a month earlier and 8.5 percent from a year earlier in May. The annual gain accelerated from 7.2 percent in April and marked the fastest increase since July 2022, when producer prices rose 9.2 percent. The annual rate has climbed steadily from 2.5 percent in February to 4.1 percent in March, 7.2 percent in April and 8.5 percent in May. Compared with February, just before the Middle East war began feeding through supply chains, the increase has more than tripled. Currency conditions added to the pressure. The dollar-won exchange rate averaged 1,491.39 won in May, up from 1,486.72 won in April. Producer prices rose 0.8 percent from the previous month in May. The monthly gain slowed sharply from a revised 2.7 percent in April as oil prices eased. The index has nevertheless risen for nine consecutive months, the longest stretch since a 13-month run from November 2020 to November 2021. Manufactured goods rose 0.7 percent from April. Chemical products climbed 1.8 percent, primary metal products rose 1.4 percent and computer, electronic and optical products gained 1.6 percent. Coal and petroleum products fell 2.3 percent from the previous month as lower crude oil prices began filtering into import costs. They were still 77.5 percent higher than a year earlier. DRAM prices rose 9.5 percent from April and 445.4 percent from a year earlier. Computer memory prices climbed 15.2 percent on the month and 223.2 percent on the year. The gains helped push up manufactured goods and export-linked prices even as the oil-driven monthly shock lost momentum. Chemical products rose 20.6 percent from a year earlier. Sulfuric acid jumped 58.7 percent from April and 215.9 percent from a year earlier. Services rose 1.2 percent from April, led by an 8.3 percent increase amid frenzied stock investment. The BOK attributed the rise mainly to higher brokerage commission fees as the benchmark stock market extended its record rally. Brokerage commission fees jumped 22.2 percent on the month and 154.5 percent from a year earlier. Transportation services gained 1.8 percent, driven by higher prices for international passenger flights and air cargo after fuel surcharges increased. Electricity, gas, water and waste services rose 0.5 percent, with industrial city gas prices up 10.3 percent due to higher raw material costs. Agricultural, forestry and fishery products fell 0.8 percent, helping limit the overall monthly increase. Farm products dropped 3.9 percent, led by a 38.6 percent fall in melon prices due to favorable crop conditions. Food prices fell 0.2 percent and fresh food prices dropped 3.2 percent. But the producer price index excluding food and energy rose 0.9 percent from April and 8.5 percent from a year earlier. The domestic supply price index, which tracks goods and services supplied in Korea, including imports, was unchanged from the previous month. Raw material prices fell 8.1 percent, mainly because imported raw material prices dropped 9.7 percent. The BOK said customs-cleared crude oil prices reflected a 17.8 percent fall in Dubai crude in April with a lag of about one month. That marked the clearest shift from April, when coal and petroleum products surged and imported raw materials pushed domestic supply prices sharply higher. In May, lower raw material costs offset increases in intermediate and final goods. Intermediate goods rose 1.2 percent and final goods gained 0.3 percent. Still, domestic supply prices rose 11.7 percent from a year earlier, the fastest increase since September 2022, showing that accumulated cost pressures have not disappeared. The total output price index rose 16.7 percent from a year earlier, the highest annual increase since the BOK began compiling the series in 2010. The index, which includes exports as well as domestic shipments, rose 1.2 percent from April. Export prices rose 2.3 percent on the month and 46.1 percent from a year earlier, led by computer, electronic and optical products and chemicals. That compared with an 8.5 percent annual increase in domestic shipment prices, underscoring much stronger price pressure on the export side. 2026-06-19 07:36:59
World Cup 26: Korea seek win over Mexico to tighten grip on Group A SEOUL, June 18 (AJP) - South Korea face Mexico on Friday morning in Korea with a chance to move closer to the Round of 32, though the calculation will first be shaped by the result between Czechia and South Africa. South Korea and Mexico both opened Group A with wins. Mexico beat South Africa 2-0 in the tournament opener, while South Korea defeated Czechia 2-1. That left the two sides level on three points, with Mexico ahead on goal difference. The match kicks off at Guadalajara Stadium in Zapopan, Mexico, at 10 a.m. Friday in Korea, or 9 p.m. Thursday local time. Before that, Czechia and South Africa will meet in another Group A match, with both teams still looking for their first points. Under the expanded 2026 format, the top two teams from each of the 12 groups qualify directly for the Round of 32, along with the eight best third-placed teams. Mexico still enter the match as the clear favorite. Opta’s match predictor gives Mexico a 48.8 percent chance of winning, compared with 24.8 percent for South Korea, while odds listed on WhoScored also favor Mexico at 2.00, with South Korea at 3.90 and a draw at 3.50. For South Korea, the simplest route is still a win. If Czechia beat South Africa or the earlier match ends in a draw, a victory over Mexico would secure South Korea a top-two finish in Group A with one match to spare. That is because South Korea would move to six points, while at least two of the other three teams would no longer be able to finish above them. But if South Africa beat Czechia, even a South Korea win over Mexico would not mathematically guarantee a top-two place. In that scenario, South Africa could still beat South Korea in the final round and Mexico could beat Czechia, leaving South Korea, Mexico and South Africa all on six points. The group would then be decided by tiebreakers such as goal difference. Even in that case, six points would almost certainly put South Korea in a strong position to advance, given that eight of the 12 third-placed teams also reach the knockout stage. A draw against Mexico would also keep South Korea in control of their fate. It would put South Korea on four points, meaning they would secure a top-two finish by avoiding defeat against South Africa in their final group match. But a draw with Mexico followed by a loss to South Africa could leave South Korea exposed to goal-difference calculations. That risk would be greatest if Czechia and South Africa draw, because all four teams could still finish on four points depending on the final round. A defeat to Mexico would leave South Korea on three points and make the South Africa match decisive. Beating South Africa would then become the clearest route to the Round of 32. A draw in the final match could still leave South Korea with a chance through the third-placed team ranking, but it would not remove uncertainty. A loss to South Africa would leave South Korea on three points and put their qualification hopes in serious danger. 2026-06-18 17:36:43
War may be ending, but the inflation bill is yet to arrive SEOUL, June 18 (AJP) - The United States and Iran have signed a memorandum of understanding to end the Gulf conflict, but the war bill has yet to arrive. The inflation shock unleashed by the monthslong Strait of Hormuz blockade is still working its way through central bank decisions, reviving upward pressure on interest rates and the U.S. dollar across Asian financial markets. The Bank of Japan and the European Central Bank have already tightened policy. The Bank of Korea may be next in July. The U.S. Federal Reserve on Thursday signaled that it could soon join them. Washington and Tehran signed a provisional agreement aimed at restoring traffic through the Strait of Hormuz and easing U.S. sanctions on Iranian oil. Oil prices reacted immediately. Brent crude fell to $77.41 a barrel and U.S. West Texas Intermediate to $74.43, both their lowest levels since early March, as markets priced in the return of Middle Eastern supply. But the agreement is not a peace treaty. It is a 14-point memorandum built around a 60-day negotiating period, leaving major issues unresolved, including Iran's nuclear program, sanctions relief and the long-term rules governing passage through the strait. Even if toll-free navigation is temporarily restored, transit terms could become a new source of friction once the two-month window expires. The agreement aims to normalize shipping within 30 days. Yet many shipowners may wait for clearer signs that the deal will hold before returning vessels, suggesting that supply chains could take longer to recover. The economic damage, meanwhile, has already been done. When fears of a Hormuz blockade peaked in March, Dubai crude surged to around $130 a barrel. South Korea was particularly exposed, with roughly 70 percent of its crude imports dependent on the strait. The resulting shock to prices, logistics and monetary policy has yet to fully run its course. The Fed's latest meeting illustrated how those effects are now feeding into policy decisions. The Fed kept its benchmark rate unchanged at 3.50 percent to 3.75 percent after its June 16-17 meeting. The decision, however, was far from dovish. Officials raised their 2026 inflation outlook, lifting their personal consumption expenditures forecast to 3.6 percent from 2.7 percent and their core PCE forecast to 3.3 percent from 2.7 percent. The stronger signal came from the dot plot. The median estimate for the federal funds rate at the end of this year rose to 3.8 percent from 3.4 percent in March. Of the 18 officials who submitted projections, nine now expect at least one additional rate increase this year. Fed Chair Kevin Warsh did not submit his own forecast. Warsh reinforced the message at his first post-meeting press conference, saying no rate cut was discussed. He noted that inflation had remained above the Fed's 2 percent target for more than five years and reiterated the central bank's commitment to restoring price stability. The Fed also adopted a more hawkish tone, removing forward-guidance language on future policy adjustments and citing supply shocks, including energy, as a source of persistent inflation. Markets reacted immediately. The two-year Treasury yield rose 13 basis points to 4.18 percent, while the 10-year yield climbed 5 basis points to 4.49 percent. The dollar index gained 0.9 percent to 100.39, moving back above the 100 mark, while the S&P 500 fell 1.2 percent to 7,420. For Asia, however, the picture is more complicated than simply cheaper oil. Lower energy prices improve trade balances and ease pressure on households. But a stronger dollar weakens local currencies, tightens financial conditions and raises import costs. For Asian central banks, the U.S.-Iran agreement has therefore shifted, rather than eliminated, the source of inflation pressure. The focus is moving from oil itself to interest rates and exchange rates, while the effects of the Hormuz shock continue to filter through monetary policy. The BOJ this week raised its policy rate to 1.0 percent from 0.75 percent, taking rates above 1 percent for the first time in 31 years. The ECB raised its deposit rate to 2.25 percent last week. The BOK has yet to act, but its rhetoric has become noticeably more hawkish. Senior Deputy Governor Ryoo Sang-dai said Thursday that the Fed, following tightening by the ECB and BOJ, had pointed to the possibility of further policy adjustments in response to inflation pressures, suggesting a broader shift among major central banks. A day earlier, Governor Shin Hyun-song personally laid out the case for inflation remaining elevated "for a considerable period," projecting headline inflation to hover around 3 percent in the second half of the year. He said the surge in fuel prices would continue to have a lagged effect even after oil returned to prewar levels, while the exchange rate remained near crisis-period levels. He also warned that rising income from record semiconductor earnings and stock market gains could build additional demand-side inflation pressure. The remarks amounted to an early warning ahead of July's rate-setting meeting. Local market moves explain policymakers' caution. The won strengthened to 1,513 per dollar on June 17 from 1,539 on June 5, while the three-year government bond yield fell to 3.71 percent from 3.88 percent. Cheaper oil helps inflation and the trade balance, but a stronger dollar works in the opposite direction by raising import prices and bond yields while weakening the currency. If the Fed's tightening bias persists, that pressure will only intensify. For Asian markets, the risk is that the U.S.-Iran memorandum arrived too late to revive the old rate-cut narrative. The inflation shock triggered by the Hormuz blockade has already pushed the world's major central banks back toward tightening. 2026-06-18 17:06:24
World Cup 26: Portugal stumble, England respond in style SEOUL, June 18 (AJP) - Portugal opened their 2026 FIFA World Cup campaign with a flat draw against DR Congo on Wednesday local time, or Thursday in Korea, while England answered doubts with a convincing victory. Ghana beat Panama with a stoppage-time winner, while Colombia overpowered an inexperienced Uzbekistan side to take early control of Group K. Portugal were held 1-1 by DR Congo at Houston Stadium in Houston, Texas, in one of the most disappointing performances by a major contender so far. Joao Neves gave Portugal an early lead in the sixth minute, heading in Pedro Neto’s cross. But DR Congo struck back deep into first-half stoppage time, when Yoane Wissa headed in Arthur Masuaku’s cross to make it 1-1. Portugal had more of the ball, but their attack often looked disconnected despite a midfield built around Bernardo Silva, Bruno Fernandes, Vitinha and Neves. At times, Portugal appeared almost split into a 5-0-5 shape, leaving little rhythm through the middle and giving DR Congo chances to counter. Portugal finished with only one shot on target, according to Reuters, and some match data also gave DR Congo the higher expected-goals total. The draw left Group K wide open and put early pressure on Portugal before matches against Uzbekistan and Colombia. England made a stronger statement in Group L, beating Croatia 4-2 at Dallas Stadium in Arlington, Texas. The Three Lions had entered the tournament under lowered expectations after an uneven buildup, but their attack looked sharp when it mattered. Harry Kane put England ahead from the penalty spot in the 12th minute before scoring again in the 42nd minute after Croatia had equalized through Martin Baturina. Croatia, third-place finishers at the 2022 World Cup, drew level again through Petar Musa early in the second half. But Jude Bellingham quickly restored England’s lead, finishing from inside the box, before Marcus Rashford sealed the win late on. For Kane, the two goals in the opening match of his third World Cup were a reminder that he remains England’s most reliable finisher. Ghana needed a dramatic finish to beat Panama 1-0 at Toronto Stadium in Toronto, Canada. Panama controlled much of the game and often looked more composed in possession. The Black Stars, who reached the World Cup quarterfinals in 2010, struggled to produce the authority expected from one of Africa’s traditional powers. But Caleb Yirenkyi scored in the fifth minute of stoppage time, turning in the winner to give Ghana all three points. The win was valuable, but Ghana’s recent run of one draw and five losses in six warm-up matches still seemed to weigh on their performance. Colombia delivered the cleanest win of the day, beating Uzbekistan 3-1 at Estadio Azteca in Mexico City. Daniel Munoz opened the scoring in the 40th minute, finishing after a pass from Luis Diaz. Uzbekistan, playing their first World Cup match, equalized around the hour mark when Abbosbek Fayzullaev headed in a rebound for his country’s first goal in tournament history. But Colombia quickly regained the lead, with Diaz scoring from a Gustavo Puerta pass in the 65th minute. Jaminton Campaz added a late third goal after a long pass caught Uzbekistan’s defense out. For Uzbekistan, the match brought a historic first goal but also showed the cost of defensive mistakes and lost concentration in key moments. Wednesday’s results left Portugal under scrutiny, England looking more settled, Ghana relieved and Colombia in control of Group K after South America’s second win of the tournament. 2026-06-18 16:04:29
Seoul waives gas tariffs, extends diesel subsidies SEOUL, June 18 (AJP) - South Korea will cut tariffs on liquefied natural gas and liquefied petroleum gas to zero, extend diesel subsidies for transport operators and broaden tariff relief on food imports as the government moves to contain cost-of-living pressure from higher energy and commodity prices. Deputy Prime Minister and Finance Minister Koo Yun-cheol chaired the 11th ministerial task force meeting on consumer price stabilization at the Government Complex Seoul on Thursday. The government said geopolitical risks had eased somewhat after U.S. President Donald Trump signed a memorandum of understanding aimed at ending the war with Iran, helping push global oil prices lower. But officials warned that global energy production, transport infrastructure and logistics networks may take time to fully normalize, leaving pressure on consumer prices intact. “Just because the waves in front of us have subsided does not mean the reefs under the surface are gone,” Koo said. He said the government would use all available tools to stabilize prices and ease the burden on households. Petroleum product prices rose 24.2 percent from a year earlier in May, following gains of 21.9 percent in April and 9.9 percent in March. Consumer inflation also accelerated to 3.1 percent in May from 2.6 percent in April and 2.2 percent in March. As part of the package, diesel subsidies for freight and passenger transport operators, which were set to expire at the end of June, will be extended through the end of September. The subsidy will also be expanded to chartered buses. The program covers 70 percent of the portion of diesel prices above 1,700 won per liter, with support capped at 280 won per liter. The government will also expand tax and tariff relief for energy products. From the second half of this year, quota tariffs on LNG, LPG and crude oil used to produce LPG will be lowered to zero. The government will cut the individual consumption tax on LNG used for power generation by 15 percent from July through December. A 25 percent flexible fuel tax cut on butane, widely used as a household and small-business fuel, will be extended by one month through the end of July. The government will also expand tariff support for food and agricultural inputs. Tariff relief will be extended for three imported fruits — bananas, pineapples and mangoes — and 10 food ingredient items including processed egg products. Nine additional items, including seven food ingredients and two feed ingredients, will be newly covered by quota tariffs. Including 27 existing items, a total of 49 products will receive support. The government said it will designate 17 food ingredients as closely monitored items to make sure tariff cuts are passed on to consumers through lower prices. It will also strengthen inspections across import and distribution channels. The government plans to reinforce its use of artificial intelligence to monitor prices more closely. AI will be used to collect and analyze prices of key food and daily necessities across production and distribution stages, while improving models used to forecast supply and price movements. The government plans to build an “Affordable Consumption App” in the second half of the year to provide real-time price and discount information by retailer. The app is aimed at helping consumers compare prices more easily and make more informed purchasing decisions. The government will also work with local governments to keep public utility charges broadly frozen in the second half of the year. A broader package to stabilize consumer prices and reduce the burden on low-income and vulnerable groups will be announced soon, officials said. 2026-06-18 13:36:43
Fed's tightening signal barely dents Asian rally SEOUL, June 18 (AJP) - The U.S. Federal Reserve's signal of joining a global tightening path to contain post-war inflation went largely unnoticed in Asia, where markets remained engrossed in AI fever and the prospect of the Strait of Hormuz reopening. Seoul authorities assessed the Fed's decision as part of a broader shift among major central banks toward tighter monetary policy, following recent rate increases by the European Central Bank and the Bank of Japan. Markets remained bullish despite the Fed’s hawkish signal. The KOSPI closed above the 9,000 mark for the first time, rising 2.25 percent to 9,063.84, as semiconductor and AI-related shares continued to lead the rally. Japan’s Nikkei 225 also finished at a record high, rising 1.65 percent to 71,053.49 after briefly climbing as high as 71,398.58 during the session. Authorities said the U.S.-Iran ceasefire agreement had helped calm volatility in Korean financial and foreign-exchange markets, but warned risks remained until there was concrete progress on reopening the Strait of Hormuz and sustained stability in oil prices. The Ministry of Economy and Finance, the Bank of Korea and financial regulators held back-to-back meetings in the morning to assess the Fed decision and its implications for Korean financial and currency markets. Deputy Prime Minister and Finance Minister Koo Yun-cheol chaired this year's fourth expanded macroeconomic and financial policy meeting at the Government Complex Seoul, joined by Bank of Korea Governor Shin Hyun-song, Financial Services Commission Chairman Lee Eog-weon and Financial Supervisory Service Governor Lee Chan-jin. The Bank of Korea separately held a market-monitoring meeting at 8 a.m., chaired by Senior Deputy Governor Ryoo Sang-dai, to review global market developments following the Federal Open Market Committee meeting and their implications for local markets. The Fed unanimously kept the federal funds target range unchanged at 3.50 percent to 3.75 percent following its June 16-17 meeting. The hold itself was widely expected. What drew attention was the combination of higher inflation projections, a more hawkish dot plot and Chair Kevin Warsh's firm message on price stability during his first post-meeting press conference. The Fed shortened its statement and removed forward-guidance language on the timing and extent of future policy adjustments. It said the U.S. economy was expanding at a solid pace despite elevated uncertainty linked partly to the Middle East conflict, while productivity growth and capital investment remained strong. Its assessment of the labor market also improved, with the Fed saying job gains had kept pace with labor-force growth, replacing earlier language that employment growth had remained subdued on average. The inflation message turned firmer. The Fed said price growth remained above its 2 percent target and added that the committee "will deliver price stability," making clear that the policy hold should not be interpreted as a dovish pivot. Updated projections reinforced that message. The Fed lowered its 2026 real gross domestic product growth forecast to 2.2 percent from 2.4 percent in March, while trimming its unemployment-rate forecast to 4.3 percent from 4.4 percent. Inflation projections, however, moved sharply higher. The Fed raised its 2026 personal consumption expenditures inflation forecast to 3.6 percent from 2.7 percent and lifted its core PCE forecast to 3.3 percent from 2.7 percent. The dot plot delivered the clearest hawkish signal, with the median estimate for the federal funds rate at the end of this year rising to 3.8 percent from 3.4 percent in March. Projections for 2027 and 2028 were also revised higher, while the longer-run estimate remained unchanged at 3.1 percent. Warsh did not submit his own dot, leaving 18 projections in the latest chart. For markets, however, the higher median projection was enough to shift expectations toward tighter policy rather than rate cuts. Warsh said at the press conference that no rate cut had been discussed during the meeting. He stressed that U.S. inflation had remained above target for more than five years and reaffirmed the Fed's commitment to restoring price stability. He also ruled out a near-term review of the 2 percent inflation target and said the current policy stance remained broadly restrictive, although its impact varied across sectors. Warsh confirmed he was reviewing the Fed's broader communications framework, including the future role of the dot plot and other tools used to guide market expectations. The won ended the daytime session at 1,527.1 per dollar in Seoul, down 13.7 won from the previous session, as the Fed’s hawkish signal revived dollar pressure despite easing oil prices. Bond yields also moved higher, with the three-year government bond yield rising 4.0 basis points to 3.750 percent and the 10-year yield climbing 4.7 basis points to 4.118 percent. 2026-06-18 10:44:27
Won, bonds stay quiet as BOJ risk fades, Fed decision looms SEOUL, June 17 (AJP) - South Korea’s currency and bond markets remained calm Wednesday as investors looked past the Bank of Japan’s rate hike and shifted their attention to the Federal Reserve’s first policy decision under Chair Kevin Warsh. The won’s market average rate strengthened 5.3 won to 1,514.75 per dollar, showing limited volatility despite Tuesday’s BOJ decision to raise interest rates to 1 percent for the first time in 31 years. Korean government bond yields also fell, with longer maturities outperforming the short end. The three-year yield declined 0.7 basis point to 3.710 percent, while the 10-year yield dropped 3.9 basis points to 4.071 percent. The larger fall in the 10-year yield suggested longer maturities were more supported, partly reflecting expectations that the Fed’s updated projections could soften the case for further rate increases. The short end was less able to fall as markets remained wary of the Bank of Korea’s tightening bias, while longer maturities were more exposed to moves in U.S. Treasury yields and global duration demand. The Japanese central bank raised its short-term policy rate by 25 basis points to 1 percent from 0.75 percent on Tuesday, bringing Japanese rates back into the 1 percent range for the first time since 1995. The decision marked another step in Japan’s monetary policy normalization after the BOJ ended negative rates in March 2024, widening the contrast with Korea and the United States, where central banks have lowered rates over the same period. The shift has narrowed Japan’s policy-rate gaps with both Korea and the United States, easing one source of pressure behind yen weakness. The BOJ move also came after repeated remarks from U.S. Treasury Secretary Scott Bessent that were read by markets as indirect support for Japan’s rate normalization. Bessent told Reuters in May that BOJ Governor Kazuo Ueda was an “excellent central banker” and that he was confident Ueda would do “what he needs to do” if given sufficient independence by Japan’s government. The remarks did not amount to a direct call for a BOJ rate hike, but they were seen as a sign that Washington was comfortable with Japan’s policy normalization at a time of yen weakness and wide U.S.-Japan rate differentials. With the BOJ event now absorbed, the main focus has shifted to the Fed’s June 16-17 policy meeting, the first chaired by Warsh. The Fed is widely expected to keep its benchmark rate unchanged at 3.75 percent, with the decision due at 3 a.m. Thursday in Seoul. Investors will focus on the updated dot plot and Warsh’s first post-meeting press conference for clues on whether policymakers are moving toward a more neutral stance or keeping the door open to further tightening. For the won, a steady Fed decision and a less hawkish dot plot could help limit upward pressure on the dollar and U.S. yields after weeks of volatility around oil prices, geopolitical risks and foreign capital flows. But the relief could be limited if Warsh emphasizes inflation risks or the need to continue reducing the Fed’s balance sheet, a message that could keep U.S. yields elevated even without a rate increase. 2026-06-17 17:46:42