Bank of Korea insists on not adjusting monetary policy even if the Fed will raise interest rates again

The governor of the Bank of Korea (BOK) insists that the BOK will not change its monetary policy by accelerating interest rate hikes to curb inflation. Although the Federal Reserve chairman announced an aggressive rate hike at the Fed’s annual meeting in Jackson Hole, Wyoming, on Friday.

During his speech at the aforementioned meeting, Powell signaled that the Fed will continue to raise interest rates for a while to contain inflation, which is interpreted by the market as “the most important thing in the world.” Chances are that the Fed will aggressively raise interest rates at its September meeting after raising rates by 0.75% in both the June and July meetings.

Powell’s comments have raised concerns that the Fed’s aggressive rate hike could take longer than expected. It was also a factor in the plunge in South Korea’s stock market on Monday (Aug. 29), with the KOSPI index plunging more than 2% and the won falling to its lowest level in more than 13 years.

The BOK continued to stress the importance of keeping a close eye on the Fed’s monetary policy approach. The BOK governor said that global financial and foreign exchange markets will be able to overcome volatility regardless of when the Fed decides to raise interest rates.

Last week, the BOK raised its key interest rate by 0.25% to 2.5% to curb a sharp increase in inflation due to rising energy and commodity prices.

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