US Fed, 3 Consecutive Rate Holds... "High Inflation and Uncertain Economic Outlook" (Overall)

US Fed, 3 Consecutive Rate Holds... "High Inflation and Uncertain Economic Outlook" (Overall)

Maintained at 3.50-3.75%... Another freeze after 3 consecutive cuts last year, and following freezes in January and March this year

"Prepared to adjust policy if employment and inflation targets are at risk"... Hinting at a potential interest rate cut

The US central bank, the Federal Reserve (Fed), froze the benchmark interest rate at 3.50-3.75% on the 29th (local time).

The Fed held the second day of its regular Federal Open Market Committee (FOMC) meeting today and decided to maintain the benchmark interest rate as such.

It is analyzed that rising inflation concerns, due to the surge in international oil prices following the Iran war, influenced this decision.

Regarding the background of the rate freeze, the Fed stated, "Inflation is at a high level, partly reflecting the recent rise in global energy prices," and "changes in the political situation in the Middle East are causing high uncertainty regarding the economic outlook."

It also stated, "Recent indicators suggest that economic activity is expanding at a solid pace," and "job growth has remained at a low level on average, and the unemployment rate has shown little change in recent months."

The Fed stated, "The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run," and that it would carefully review economic indicators, changes in economic forecasts, and risk factors in future benchmark interest rate decisions.

It also said, "The Committee is prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals." This was interpreted as hinting at a potential interest rate cut.

Among the 12 voting members of the FOMC, Fed Governor Stephen Myron, known as 'Trump's economic strategist,' advocated for a 0.25 percentage point rate cut and opposed the rate freeze.

Three other members, Beth Hammack, Neel Kashkari, and Lorie Logan, agreed to the rate freeze but opposed the Fed's statement hinting at a dovish stance (rate cut).

The Fed cut interest rates three consecutive times in September, October, and December last year, but this year, it has made three consecutive freeze decisions, following January and March.

With this decision, the interest rate gap between Korea (2.50%) and the US remained at 1.25 percentage points based on the upper bound.

The next FOMC meeting will be held on June 16-17.

When current Chair Powell's term ends on May 15 and he steps down, Kevin Warsh, the nominee for the next Chair, is expected to preside over that meeting. The Senate Banking Committee's confirmation bill for Warsh was passed today, and his confirmation will be finalized after a vote in the full Senate.

As US President Donald Trump continuously pressures for benchmark interest rate cuts, it remains to be seen what interest rate decisions the Fed will make under Warsh's leadership.

Warsh, the nominee, previously stated at his Senate confirmation hearing, "Presidents tend to favor interest rate cuts," but also said, "The Fed's independence rests with the Fed itself," indicating his position to make independent monetary policy decisions.