Seoul: The Federal Reserve’s latest interest rate cut has provided the Bank of Korea (BOK) with increased latitude to concentrate its monetary policy on domestic priorities, the central bank stated on Thursday.
According to Yonhap News Agency, BOK Deputy Gov. Park Jong-woo shared this assessment while leading a market situation meeting. This followed the Fed’s decision to reduce its benchmark rate by a quarter percentage point, marking its first rate cut of the year due to slower job growth.
Park emphasized that the BOK now has more freedom to direct monetary policy towards domestic growth, inflation, and financial stability. However, he also highlighted the “high uncertainty” surrounding the future path of United States monetary policy, pointing out the significant differences in opinions among Federal Open Market Committee (FOMC) members.
Park mentioned ongoing concerns about U.S. tariff policy and fiscal soundness in major economies as external risk factors, stressing that the BOK will maintain a vigilant stance and closely observe market conditions. Despite these external challenges, the BOK decided to keep its key rate steady for the second consecutive time in a rate-setting meeting held late last month, amidst ongoing worries about rising housing prices and household debt.