Washington: The U.S. Federal Reserve decided to keep its benchmark interest rate unchanged on Wednesday, following a significant demand from President Donald Trump for rate reductions just last week. The decision was made after a two-day Federal Open Market Committee (FOMC) meeting, retaining the rate within the range of 4.25 to 4.50 percent.
According to Yonhap News Agency, this decision comes on the heels of several rate cuts over the past months, including a quarter-percentage-point cut last month, a 25 basis-point reduction in November, and a 50-basis-point cut in September. The FOMC’s recent economic projections indicated that the federal funds rate might dip to 3.9 percent by the year’s end, suggesting the potential for further rate reductions.
The maintained rate has created a disparity of up to 1.5 percentage points between the key rates of South Korea and the United States. During a press conference, Fed Chair Jerome Powell expressed confidence in the current economic situation, emphasizing that there is no urgency to alter monetary policy. Powell remarked, “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.”
Despite President Trump’s recent remarks at the World Economic Forum demanding immediate rate cuts, Powell refrained from commenting directly, maintaining the Fed’s focus on its objectives. “The public should be confident that we will continue to do our work as we always have,” Powell assured, highlighting the Fed’s commitment to its goals.
Addressing the potential effects of Trump’s policies, Powell noted that the Fed is in a “waiting mode” to observe the enactment of tariffs, immigration, fiscal, and regulatory policies before assessing their economic implications. In response to Trump’s social media post accusing the Fed of mishandling inflation and bank regulation, Powell reiterated the Fed’s dedication to monitoring policy initiatives.
President Trump, in his post on Truth Social, criticized the Fed’s focus on diversity, equity, and inclusion programs, linking them to inflation issues. He pledged to counteract inflation by boosting American energy production and manufacturing, among other measures, while criticizing the Fed’s regulatory approach.