Advice has been given that investment strategies should be adjusted according to the policy direction of the U.S. Federal Reserve (Fed). Experts emphasize that it is important to read the economic projections summary (SEP) included in Federal Reserve Chair Jerome Powell's statements and dot plot, rather than the possibility of interest rate fluctuations.
Interest rates are expected to remain frozen, but if Chair Powell indicates a more accommodative currency policy than before, it could have a positive impact on the stock market due to expectations of interest rate cuts. Conversely, if the Fed maintains a hawkish stance, focusing on stocks with clearly improving performance will be advantageous.
Fed's FOMC Meeting to Influence Korean Stock Market as Interest Rates Expected to Hold
Monetary policy updates may cause fluctuations in South Korea's financial markets depending on the Federal Reserve's signals.
By
Cho Eun-seo
Published 2025.06.17. 08:12
Updated 2025.06.17. 08:21
Advice has been given that investment strategies should be adjusted according to the policy direction of the U.S. Federal Reserve (Fed). Experts emphasize that it is important to read the economic projections summary (SEP) included in Federal Reserve Chair Jerome Powell's statements and dot plot, rather than the possibility of interest rate fluctuations.
Interest rates are expected to remain frozen, but if Chair Powell indicates a more accommodative currency policy than before, it could have a positive impact on the stock market due to expectations of interest rate cuts. Conversely, if the Fed maintains a hawkish stance, focusing on stocks with clearly improving performance will be advantageous.
Jerome Powell, Chair of the U.S. Federal Reserve (Fed).
Jerome Powell, Chair of the U.S. Federal Reserve (Fed).
The Federal Reserve will hold a Federal Open Market Committee (FOMC) meeting on 17th and 18th (local time). The market's attention is focused on the Fed's currency policy direction. Recently, with the KOSPI index rising nearly 12% for three consecutive weeks, it is expected that the Fed's policy direction will affect the stock market.
Experts are adopting the atmosphere of accepting the interest rate freeze in June as a 'done deal.' According to the Chicago Mercantile Exchange (CME) FedWatch, the interest rate futures market sees a 99.1% chance that the Fed will keep the benchmark interest rate frozen at 4.25% to 4.5%. The forecast for a July freeze is 84.8%.
Rather, what to watch in this FOMC is the future direction of currency policy. The key will be whether the Fed hints at the possibility of interest rate cuts after freezing the rates this month.
The first scenario is if the Fed shows 'dovish' behavior by holding off on interest rate hikes. In this case, there is a high probability that the won will strengthen against the dollar, and further potential for a rise in the KOSPI could be expanded due to foreign capital inflows.
Lee Jae-man, a researcher at Hana Securities, noted, "If the Fed's currency policy stance becomes more dovish, one of the variables for KOSPI's rise will be corporations' shareholder-friendly policies," adding, "When selecting companies, it is essential to focus on those with a higher dividend per share (DPS) growth rate compared to the earnings per share (EPS) growth rate this year, and those with a price-to-book ratio (PBR) below 1." He suggested KB Financial, Hyundai Mobis, Mirae Asset Securities, and Korean Air.