US Fed Holds Benchmark Rate Steady at 3.50%-3.75%

The U.S. central bank, the Federal Reserve (Fed), has frozen its benchmark interest rate at the current level of 3.50-3.75% during its rate-setting meeting, deciding to maintain the existing rate to further monitor inflationary conditions. This decision to hold the benchmark rate steady passed with 11 votes in favor and 1 against. Board member Steven Myron cast the dissenting vote, advocating for a 0.25 percentage point cut.

The Fed newly added a phrase to its statement indicating that developments in the Middle East have uncertain implications for the U.S. economy.

The Fed maintained its median forecast for the benchmark interest rate at year-end at 3.4%, unchanged from December. The forecast for U.S. real Gross Domestic Product (GDP) growth this year was revised upward by 0.1 percentage points from December to 2.4%. The projected personal consumption expenditures (PCE) price index inflation for this year was reported at 2.7%, 0.3 percentage points higher than the December forecast, while the unemployment rate projection remained at 4.4%, the same as the previous outlook.

With the U.S. benchmark interest rate held steady, the interest rate differential between South Korea and the United States remains at 1.25 percentage points at the upper end.