Four Financial Authorities Chiefs to Hold ‘F4 Meeting’ This Week, Watching for Possible U.S. Rate Hike

[Financial News] The heads of four financial authorities will hold an ‘F4 (Finance 4)’ meeting this week to seek ways to respond to instability in global financial markets.
According to financial authorities on the 13th, an expanded macroeconomic and financial meeting will be held on the 17th, when news is expected to emerge on the Federal Open Market Committee’s (FOMC) interest-rate decision. The meeting is chaired by the deputy prime minister for economic affairs and attended by the finance minister, the governor of the Bank of Korea, and the governor of the Financial Supervisory Service. It is commonly abbreviated as the F4 meeting.
Financial markets are increasingly expecting a rate hike after the United States announced on the 11th (local time) that its August consumer price index (CPI) had risen 3.4% from the same month a year earlier. According to FedWatch by the Chicago Mercantile Exchange (CME), the probability of a September hike priced into the interest-rate futures market jumped from 72% the day before the inflation data was released to 87% in a single day. International oil prices have surpassed $100 per barrel.
The Bank of Japan is also widely expected to raise rates this week. On the 10th, the European Central Bank (ECB) raised its three key policy rates by 0.25 percentage points each. On the 27th of last month, the Bank of Korea raised its benchmark rate by 0.25 percentage points to 3.00%, marking its second consecutive monthly hike. Amid inflation concerns, the yield on 10-year U.S. Treasury bonds briefly exceeded 5%, while the yield on three-year South Korean government bonds surpassed 4% for the first time in about three years.
If Lee Hyoung-il takes office immediately after his confirmation hearing on the 15th, the meeting will effectively serve as his debut. The FOMC’s decision and domestic and international financial-market trends are expected to be discussed.
The Financial Services Commission (FSC) will summon household-loan officials from the five major banks—KB Kookmin Bank, Shinhan Bank, Bank of Hope, Woori Bank, and Nonghyup Bank—for a working-level meeting on household debt on the 15th.
During the fall moving season, officials will closely examine whether each financial institution is complying with its newly established lending-volume management targets. Discussions are also expected to accelerate on launching long-term fixed-rate mortgage loans to minimize borrowers’ exposure to interest-rate fluctuations. Lee Eok-won, chairman of the FSC, reportedly instructed officials at a recent internal executive meeting to closely examine support for vulnerable groups and the growing interest burden on borrowers as the country enters a full-fledged period of rate hikes.
If the United States decides to raise its benchmark rate on the 17th, the Financial Supervisory Service will also hold a financial situation review meeting chaired by Lee Chan-jin. The agency is expected to assess corporate financing conditions and interest burdens on vulnerable borrowers before considering response measures.
  
[email protected] Eun-hyo Cho Reporter