Question Brief – 4/23/25

IX – Eric Qian

What will be Yoon Suk Yeol’s legacy?

To be completely honest, this is not a fun question. Not a complicated one—but weirdly broad and predictive. 

A politician’s legacy is determined by what they’re remembered for; that’s determined by common themes across their time in office. One theme I see with Yoon is self-interest—namely, he desperately tried to hold onto power with his declaration of martial law. I read this BBC article to come up with points/get a basic overview of what’s been happening in South Korea.

a legacy of self-interest

topics I got from the BBC article

1. North Korea
2. refusing to investigate his wife
3. push to suppress the opposition (lame duck president)
4. split PPP (People Power Party), rise of the Korean far-right

1. refusing to investigate his wife
   1. several corruption scandals – eg. accepting a Dior bag from a pastor and allowing her bank accounts to be used for manipulating stock prices
   2. Yoon Suk Yeol simply refused to investigate his wife despite months of calls from the opposition → not even an investigation indicates self-interest (if he was truly innocent, he’d be more willing to push for an investigation)
2. failing to work across the aisle
   1. the opposition disagreed with Yoon on the budget – the opposition wanted to cut funding by 2.9 billion dollars in areas such as prosecutors, policing, and Yoon’s executive office
   2. Yoon cited this as a reason for declaring martial law → legacy of turning towards undemocratic alternatives, not a productive, peaceful approach
3. using North Korea as a blanket justification
   1. Yoon was elected for his harsher stance on North Korea → he also cited “anti-state forces” in declaring martial law
   2. he’ll be remembered for his untrustworthiness, though → he reversed the martial law declaration only 6 hours after he made it; North Korea was never the reason for the declaration

DX- Feven Tesfaye

Q: Will the Federal Reserve increase interest rates?

A: No – the Federal Reserve will not raise interest rates in the near term.

Having picked the answer no pretty quickly, as a lot of news I’ve read has examined how the Federal Reserve has grown increasingly worried under the new Presidential Administration. I transitioned into coming up with a good base for my response, I came up with the main pressures weighing on the Fed’s decisions: economic data, increasing political pressure, and long-term institutional reputation.

1) Inflation is softening, and rate increases could overcorrect the economy

1. The Consumer Price Index has increased only moderately in recent years, even though inflation is still above the Fed’s 2% target, it’s slowing, and the labor market is also pointing towards weakening.
2. Unemployment claims have risen marginally, and job growth is decelerating, which implies that a rate hike may nudge the economy towards unnecessary contraction.
3. In the past (naming precedent is always good!), the Fed has been criticized for tightening too aggressively following crises, and Chair Powell has emphasized a “wait and see” strategy not to cause a recession.

2) Political and External Pressures Require Caution

1. There have been many trade policy uncertainties, under the recent implementation of tariffs, such as the 25% tariff on steel and aluminum imports, which have added additional complexity to the economic scenario, which could impact inflation and growth. ​
2. The political dynamics and political pressure on the Federal Reserve have been consistent, and Jerome Powell (The Fed Chairman) has been talked of being removed from office. This political interference may undermine the Fed’s independence as well as make objective policy decisions.
3. If increasing rates, the financial markets are currently anticipating a devastating impact, which has been on the back of Trump telling the Fed to cut the rates. All of these conflicting factors will likely leave the Fed with no other option but to decrease rates.

3) The Fed’s long-term reputation is on the line

1. The central bank’s credibility relies on both transparency and consistency. If the Fed were to raise rates suddenly without clear new evidence suggesting the need, it could rattle markets and undermine confidence.
2. The markets already have a “pause” built in and are responding more to the clarity and predictability already offered by the Fed.
3. A shift in direction suddenly would undo months of forward guidance and threaten to spike both bond and equity market volatility, something the Fed is keen to avoid heading into a sensitive economic period, especially after the US is only starting to get out of the Pandemic effects.