South Korea's central bank vice governor, Park Jong Woo, stated during a press conference on Thursday that the bank must exercise greater caution than before when making interest rate decisions, citing the high level of uncertainty surrounding the situation in Iran. He noted that the policy environment has changed significantly since the last monetary policy committee meeting. The Middle East situation is expected to have a considerable impact on future monetary policy, and current uncertainty remains so high that it is even difficult to establish a "baseline scenario" for economic forecasts. The Bank of Korea's stance is consistent: if financial market volatility expands, it will initiate market stabilization measures; the central bank will also continue to take necessary market response actions as the situation evolves. Earlier this week, the Bank of Korea announced direct purchases of government bonds. Park explained that this decision was made when the three-year government bond yield rose by more than 20 basis points, and if left unaddressed, it could have spread to credit markets, short-term funding markets, and the overall bond market.
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