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| ▲ U.S. Federal Reserve Chair Jerome Powell speaks during a press conference at the Federal Reserve Board Building in Washington on March 18, 2026, in this photo released by EPA. (Yonhap) |
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| ▲ U.S. Federal Reserve Chair Jerome Powell speaks during a press conference at the Federal Reserve Board Building in Washington on March 18, 2026, in this photo released by AFP. (Yonhap) |
(2nd LD) FOMC-rate decision
(2nd LD) Fed holds key rate steady, projects 1 rate cut this year amid Iran war uncertainty
(ATTN: UPDATES with more info in paras 8-14; CHANGES photo; ADDS photo)
By Song Sang-ho
WASHINGTON, March 18 (Yonhap) -- The U.S. Federal Reserve on Wednesday held its benchmark interest rate steady for the second consecutive time and maintained its projection of one rate cut this year, as concerns grew over the economic impact of the ongoing U.S.-Israeli war against Iran.
During the two-day Federal Open Market Committee (FOMC) meeting, the central bank decided to leave the rate unchanged at the 3.5-3.75 percent range. The pause put the gap between the key rates of South Korea and the United States at up to 1.25 percentage points.
The Fed's decision to stand pat came as the central bank faced a tough rate-setting decision due to rising oil prices and its potential impact on inflation, and a weak U.S. employment report, which showed a loss of 92,000 jobs last month.
According to FOMC members' new median economic projection, the federal funds rate is expected to be cut to 3.4 percent at the end of this year -- the same as the December forecast, signaling the possibility of a quarter percentage point cut this year.
In a press release on the latest rate decision, the central bank pointed out economic uncertainties stemming from the ongoing conflict in the Middle East.
"Uncertainty about the economic outlook remains elevated," it said.
"The implications of developments in the Middle East for the U.S. economy are uncertain. The committee is attentive to the risks to both sides of its dual mandate," it added, referring to the Fed's two objectives of achieving maximum employment and inflation at the rate of 2 percent.
During a press conference, Fed Chair Jerome Powell said that in the near term, higher energy prices will push up overall inflation, while stressing that it is "too soon" to know the scope and duration of their potential effects on the economy.
When asked whether the rate forecast remained unchanged because the Fed thinks the "oil shock" will be temporary, Powell said, "Nobody knows."
"You know the economics effect could be bigger. They could be much smaller or much bigger," he said. "We just don't know."
Responding to a question about what would happen if no new Fed chair is confirmed on May 15 when his term ends, Powell said that he will serve as "chair pro tem" until his successor's confirmation. President Donald Trump nominated Kevin Warsh, a former Fed official, in late January.
"That's what the law calls for. That's what we've done on several occasions, including involving me, and it's what we are going to do in this situation," he said.
Moreover, he said that he has no intention to leave the Fed Board of Governors "until the investigation is well and truly over with transparency and finality," referring to the probe regarding a Fed building renovation project. Powell's stint as a governor is set to expire in January 2028.
"On the question of whether I will then continue to serve as a governor after my term (as chair) ends and after the investigation is over, I have not made that decision yet," he said. "I will make that decision based on what I think is best for the institution and for the people we serve."
U.S. gross domestic product is expected to grow by 2.4 percent this year, up from 2.3 percent projected in December, and by 2.3 percent next year, up from the previous forecast of 2 percent, according to the latest Fed median projection.
Personal Consumption Expenditures (PCE) inflation is projected to reach 2.7 percent at the end of the year, up from the December projection of 2.4 percent, and 2.2 percent at the end of next year, up from 2.1 percent projected in December.
PCE is a measure of household consumer spending on goods and services in the U.S.
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