▲ U.S. Federal Reserve Chair Jerome Powell speaks during a press conference in Washington on Jan. 29, 2025 in this photo released by Reuters. (Yonhap)

(2nd LD) FOMC-rate decision

(2nd LD) U.S. Fed holds key lending rate steady

(ATTN: UPDATES throughout with more remarks, details: TRIMS; ADDS photo)

By Song Sang-ho

WASHINGTON, Jan. 29 (Yonhap) -- The U.S. 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 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.

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