US Fed holds key lending rate steady

Yonhap, Philippine News Agency

During a press conference, Fed Chair Jerome Powell noted the “broad sense” of the FOMC that the central bank does not need to be in a rush to adjust its monetary policy. (File Photo: Paul Morigi Photography via Brookings Institution/Flickr, CC BY-NC-ND 2.0)

WASHINGTON – The US Federal Reserve kept its benchmark interest rate unchanged Wednesday, less than a week after President Donald Trump said he would demand rate reductions.

After the two-day Federal Open Market Committee (FOMC) meeting, the central bank announced the decision to hold the rate steady at the 4.25 to 4.50 percent range. It followed a quarter-percentage-point cut last month, another 25 basis-point cut in November and a 50-basis-point reduction in September.

Last month, FOMC members’ new median economic projections showed that the federal funds rate would be cut to 3.9 percent at the end of this year, signaling the possibility of two rate reductions this year.

This week’s rate decision put the gap between the key rates of South Korea and the United States at up to 1.5 percentage points.

During a press conference, Fed Chair Jerome Powell noted the “broad sense” of the FOMC that the central bank does not need to be in a rush to adjust its monetary policy.

“We see things as in a really good place for policy and for the economy, and so we feel like we don’t need to be in a hurry to make any adjustments,” he said after the FOMC meeting

The Fed’s overall assessment of the economy in a press release struck a positive note.

“Recent indicators suggest that economic activity has continued to expand at a solid pace,” the Fed said. “The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated.”

The Fed’s pause came after Trump told the World Economic Forum in a video call last week that he will demand interest rates drop “immediately,” claiming that he knows rates better than the central bank.

Powell parried a question over Trump’s remark, saying it is “not appropriate” to comment on it. He also said he has had no contact regarding Trump’s demand for rate cuts.

“I’m not going to have any response or comment whatsoever on what the president said,” the chair said.

“The public should be confident that we will continue to do our work as we always have, focusing on using our tools to achieve our goals and really keeping our heads down and doing our work, and that’s how we best serve the public.”

Touching on the implications of Trump’s policy measures related to tariffs, immigration and others, Powell said that the central bank is “in the mode of waiting to see what policies are enacted.”

“We don’t know what will happen with tariffs, with immigration, with fiscal policy and with regulatory policy … Actually, (we) are not really beginning to see much,” he said, noting the Fed will be carefully watching Trump’s policy initiatives.

“I think we need to let those policies be articulated before we can even begin to make a plausible assessment of what their implications for the economy will be,” he said.

In a social media post later, Trump accused Powell and the Fed of failing to stop “the problem they created with inflation.”

“I will do it by unleashing American Energy production, slashing Regulation, rebalancing International Trade, and reigniting American Manufacturing, but I will do much more than stopping Inflation, I will make our Country financially, and otherwise, powerful again!,” he wrote on Truth Social.

He also claimed that the central bank has done a “terrible” job on bank regulation.

“Treasury is going to lead the effort to cut unnecessary Regulation, and will unleash lending for all American people and businesses,” he said.

“If the Fed had spent less time on DEI, gender ideology, “green” energy, and fake climate change, Inflation would never have been a problem. Instead, we suffered from the worst Inflation in the History of our Country!”

DEI refers to diversity, equity and inclusion programs that Trump described as a “discrimination policy.” He has ordered to end it under an executive order. (Yonhap)