▲ New Federal Reserve Chair Kevin Warsh delivers a speech during his swearing-in ceremony at the White House in Washington on May 22, 2026, in this photo released by Reuters. (Yonhap)

(LEAD) FOMC-rate decision

(LEAD) Fed holds key interest rate steady under new Chair Warsh, projects higher rate this year

(ATTN: ADDS more info in paras 2-3, 5-7)

By Song Sang-ho

WASHINGTON, June 17 (Yonhap) -- The U.S. Federal Reserve on Wednesday held its benchmark interest rate steady for the fourth consecutive time, marking its first rate decision since new Chair Kevin Warsh took office last month, amid lingering concerns over the economic fallout of the Middle East conflict.

During the two-day Federal Open Market Committee (FOMC) meeting, the central bank decided unanimously to leave the rate unchanged at the 3.5-3.75 percent range. The pause left the gap between the key rates of South Korea and the United States at up to 1.25 percentage points.

According to the FOMC members' new median economic projection, the federal funds rate is expected to be cut to 3.8 percent at the end of this year, up from the March projection of 3.4 percent, suggesting a higher year-end rate than previously projected.

The meeting came a week after the U.S. Labor Department reported that the consumer price index rose 4.2 percent in May from a year earlier -- a rise largely driven by higher energy prices caused by the U.S.-Israeli war against Iran. It marked the largest annual increase since 2023.

U.S. gross domestic product is expected to grow by 2.2 percent this year, down from 2.4 percent projected in March, and by 2.3 percent next year, the same as the previous forecast, according to the latest median projection.

Personal Consumption Expenditures (PCE) inflation is projected to reach 3.6 percent at the end of the year, a jump from the March projection of 2.7 percent, and 2.3 percent at the end of next year, up from 2.2 percent projected in March.

PCE is a measure of household consumer spending on goods and services in the U.S.

Warsh was sworn in as the new Fed chair, succeeding Jerome Powell on May 22, who had repeatedly been slammed by U.S. President Donald Trump for not lowering interest rates.

At the swearing-in ceremony, Warsh vowed to lead a "reform-oriented" central bank and underscored his commitment to achieving the central bank's dual mandate of promoting price stability and maximum employment with "independence and resolve."

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