▲ This photo, released by Reuters, shows U.S. Federal Reserve Chairman Kevin Warsh holding a press conference at the U.S. Federal Reserve in Washington on June 17, 2026. (Yonhap)

(ATTN: RECASTS lead; ADDS more info in paras 4, 7-9)

By Song Sang-ho

WASHINGTON, Sept. 16 (Yonhap) -- The U.S. Federal Reserve raised its benchmark interest rate by a quarter percentage point on Wednesday, marking its first hike since July 2023, while signaling the possibility of another increase later this year amid persistent inflation and high oil prices.

During the two-day Federal Open Market Committee (FOMC) meeting, the Fed decided to increase the rate to the 3.75–4.00 percent range in a 12-0 vote, although U.S. President Donald Trump has threatened to stop trading with countries running a trade surplus with the United States unless the central bank lowers rates.

The increase left the gap between the key interest rates of South Korea and the U.S. at up to 1 percentage point.

According to the FOMC members' new median economic projection, the federal funds rate is expected to rise to 4.1 percent at the end of this year, up from the June projection of 3.8 percent, indicating the possibility of another increase later this year.

In the run-up to the FOMC meeting, new data added to concerns over price pressures. On Friday, the Labor Department's Bureau of Labor Statistics reported that the "core" consumer price index, which excludes volatile food and energy costs, recorded a 0.3 percent monthly gain last month, 0.1 percentage point higher than forecast.

This week's hike marked a setback for Trump as the president has continued to pressure the central bank to bring down borrowing costs to boost the economy, particularly ahead of the November midterm elections, where control of Congress is at stake.

U.S. gross domestic product is expected to grow by 2.3 percent this year, up from 2.2 percent projected in June, and by 2.4 percent next year, up from the previous forecast of 2.3 percent, according to the Fed median projection.

Personal Consumption Expenditures (PCE) inflation is projected to reach 3.7 percent at the end of the year, an increase from the June projection of 3.6 percent, and 2.3 percent at the end of next year, the same as the previous forecast.

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

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