Acting Finance Minister Lee Hyoung-il (2nd from left) speaks during a meeting on macroeconomic issues, along with senior officials, in Seoul on Thursday. (Yonhap)
Acting Finance Minister Lee Hyoung-il (2nd from left) speaks during a meeting on macroeconomic issues, along with senior officials, in Seoul on Thursday. (Yonhap)

The government will enhance monitoring of the economy and financial markets and devise appropriate responses based on contingency plans amid escalating tensions in the Middle East, the finance ministry said Thursday.

The pledge was made during a meeting on macroeconomic issues presided over by Acting Finance Minister Lee Hyoung-il and attended by Bank of Korea Deputy Gov. Ryoo Sang-dai, along with senior officials from the Financial Services Commission and the Financial Supervisory Service, according to the Ministry of Economy and Finance.

"Following Israel's airstrike on Iran, volatility in commodity prices and global financial markets has increased," Lee said.

"The domestic financial market remains relatively stable, but uncertainty remains high due to the Israel-Iran conflict, as well as unclear US tariff policies," he added.

In response, the government is "on alert, closely monitoring the situation and continuing to operate a 24-hour monitoring system," Lee said, adding that a joint emergency response team involving relevant agencies is currently in operation.

"The government will respond swiftly, in close coordination with relevant agencies, if necessary, in accordance with contingency plans based on various scenarios," Lee stated.

The central bank reaffirmed efforts to help stabilize the market in its own separate meeting.

"Geopolitical risks have significantly increased due to the recent military clash between Iran and Israel and concerns over potential escalation. We will maintain heightened vigilance and closely monitor market conditions in light of the possibility of increased volatility in financial and foreign exchange markets," BOK Deputy Gov. Park Jong-woo said.

Regarding the recent US Federal Open Market Committee meeting, Park noted that uncertainty surrounding the future path of US monetary policy has grown.

"Fed Chair Jerome Powell indicated a cautious approach to policy decisions, taking into account such factors as US tariff policy, while projections among Fed officials remain widely divergent," Park said.

The Fed kept its key interest rate unchanged and maintained its forecast of two rate cuts this year, as it continues to monitor the effects of President Donald Trump's tariff measures and the escalating Israel-Iran conflict. (Yonhap)