The Bank of Korea said uncertainty over the U.S. Federal Reserve’s monetary policy path has increased, prompting closer monitoring of financial markets.
The central bank held a “market situation review meeting” on Thursday morning chaired by Senior Deputy Gov. Yoo Sang-dae to assess the latest Federal Open Market Committee outcome and developments tied to the Middle East war.
“After last night’s FOMC meeting, views within the Fed were sharply divided, and inflation driven by higher oil prices was emphasized, further increasing uncertainty over the U.S. monetary policy path after the next Fed chair takes office,” Yoo said.
He added that concerns are growing the Middle East war could be prolonged as U.S.-Iran talks face difficulties. “We will closely monitor how domestic and external risk factors develop and their impact on finance and the economy, and respond in a timely manner if necessary,” he said.
The Fed said in a statement on April 29 (local time) that it decided, as markets expected, to keep its benchmark interest rate unchanged at 3.50% to 3.75%. Eight members supported the decision and four dissented, the statement said.
The Fed raised its assessment of inflation and said uncertainty around the economic outlook had increased due to the Middle East situation.
Chair Jerome Powell said at a news conference that signs of labor-market stabilization are spreading, but warned that inflation pressures have risen in the near term due to higher energy prices.
In international financial markets, oil prices surged on concerns about the possibility of a prolonged U.S. blockade at sea against Iran. With the FOMC outcome viewed as hawkish, U.S. Treasury yields rose sharply and the dollar strengthened.
* This article has been translated by AI.
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