▲ Fed Chair Jerome Powell speaks during a news conference at the Federal Reserve Board Building in Washington on Jan. 28, 2026, in this photo released by the Associated Press. (Yonhap)

(2nd LD) FOMC-rate decision

(2nd LD) U.S. Fed leaves key rate unchanged after 3 consecutive cuts

(ATTN: ADDS more info in paras 4-7, 9-13; CHANGES photo)

By Song Sang-ho

WASHINGTON, Jan. 28 (Yonhap) -- The U.S. Federal Reserve kept its benchmark interest rate steady on Wednesday, defying President Donald Trump's continued pressure on the central bank to lower borrowing costs amid concerns over its independence.

During the two-day Federal Open Market Committee (FOMC) meeting, the Fed decided to leave the rate unchanged at the 3.5-3.75 percent range. Following three straight reductions since September, the pause has put the gap between the key rates of South Korea and the United States at up to 1.25 percentage points.

Out of the total 12 voting members, 10 FOMC officials, including Fed Chair Jerome Powell, voted for the pause. Stephen Miran and Christopher Waller voted against the monetary policy action, preferring to lower the rate by a quarter percentage point.

During a press conference, Powell described the Fed's current policy stance as "appropriate" as he explained that inflation remains "somewhat elevated" with the unemployment rate having shown "some signs of stabilization."

"Since last September, we have lowered our policy rate 75 basis points, or three quarters of a percentage point, bringing it within a range of plausible estimates of neutral," he said, referring to a level that neither stimulates the economy nor slows it down.

"This normalization of our policy stance should help stabilize the labor market while allowing inflation to resume its downward trend toward 2 percent once the effects of tariff increases have passed through."

He went on to say that the Fed is "well positioned to determine the extent and timing of additional adjustments to its policy rate based on the incoming data, the evolving outlook and the balance of risks."

This week's pause came weeks after Powell revealed that he was the subject of a probe concerning his congressional testimony last year and the Fed's building renovation project, casting it as a consequence of the bank setting rates based on its assessment "rather than following the preferences of the president."

The Fed chair declined to answer politically tinged questions but underscored the importance of the central bank's independence.

"The point of independence is not to protect policymakers or anything like that. It just is that every advanced economy, democracy in the world, has come around to this common practice," he said.

"It's just an institutional arrangement that has served the people well, and that is to not have direct elected official control over the setting of monetary policy."

He added that he is "strongly committed" to maintaining the Fed's independence.

Trump is expected to announce his pick for a new Fed chair in the near future as Powell's term as chair ends in May. Powell's term as a member of the Board of Governors expires in January 2028.

(END)

[ⓒ K-VIBE. 무단전재-재배포 금지]