The Bank of Korea(BOK) has focused on the U.S. Federal Reserve’s indication to further raise its key rate if necessary and to keep its monetary policy tight for a long period of time.
The central bank convened a meeting on Thursday and discussed the results of the two-day meeting of the Federal Open Market Committee(FOMC) and what the outcome means for the nation’s financial and foreign exchange markets.
BOK Deputy Governor Ryoo Sang-dae, who chaired Thursday’s meeting, said though the Fed kept the target range for its benchmark rate unchanged, it also hinted that it would keep monetary policy tight for a long period of time as it left open the possibility of further hikes and raised the median federal funds rate for 2024.
Ryoo said the BOK will closely monitor the impact that financial markets both at home and abroad could face from prolonged monetary tightening that could result from U.S. and other key economies’ inflation and economic situations as well as changes in international raw material prices.
In particular, Ryoo stressed the need to be mindful of the possibility that a recent surge in global oil prices could result in rising inflation.
Earlier on Wednesday, the Fed unveiled its decision to keep the target range for its benchmark rate at five-point-25 to five-and-a-half percent.
Fed Chair Jerome Powell said the central bank is prepared to raise rates further if deemed necessary and intends to hold “policy at a restrictive level" until it is confident that inflation is moving down sustainably toward its objective.
Also on Wednesday, the FOMC disclosed that the federal-funds rate is likely to close out next year at five-point-one, up from the four-point-six percent level forecast in June, indicating fewer rate cuts than previously expected.