US Fed holds key lending rate steady, but hints at another hike later this year
U.S. Federal Reserve Chairman Jerome Powell takes questions from reporters during a press conference after the release of the Fed policy decision to leave interest rates unchanged, at the Federal Reserve in Washington, D.C., U.S, Sept. 20. Reuters-Yonhap
The U.S. Federal Reserve on Wednesday left its benchmark lending rate unchanged, but raised the possibility of another rate hike later this year in its pursuit of robust employment and price stability.
After the two-day rate-setting Federal Open Market Committee (FOMC), the central bank announced the decision to hold the rate steady between 5.25 percent and 5.50 percent. It raised the rate by a quarter percentage point to the current level in July.
Wednesday's decision marks the second pause in the rate-hiking campaign that the Fed started in March last year in the hopes of bringing inflation down to its 2 percent target. It was a much-anticipated step likely to give policymakers time to assess the effect of earlier rate hikes.
The Fed cited two goals of achieving maximum employment and inflation at the 2 percent rate over the long run as the reason for its decision.
"Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have slowed in recent months but remain strong, and the unemployment rate has remained low," the Fed said in a press release, pointing to the overall economic conditions.
"The U.S. banking system is sound and resilient. Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation," it added.
In a press conference, Fed chair Jerome Powell hinted at the likelihood of another rate hike down the road.
"We are prepared to raise rates further if appropriate, and we intend to hold policy at a restrictive level until we are confident that inflation is moving down sustainably toward our objectives," he said.
The latest rate decision left the gap between the key rates of South Korea and the United States at up to 2.0 percentage points. (Yonhap)