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US Federal Reserve Chair Jerome Powell delivers remarks during a press conference in Washington on June 12 in this photo released by Reuters. (Yonhap) |
The US Federal Reserve on Wednesday held its benchmark lending rate steady for an eighth consecutive time, while its chair said a rate cut could be "on the table" as soon as September if conditions are met.
After the two-day Federal Open Market Committee meeting, the central bank announced the decision to maintain the rate in the 5.25 to 5.50 percent range, a 23-year high, and pointed out "some further progress" toward its inflation target of 2 percent.
Albeit in a cautious tone, Fed Chair Jerome Powell noted the committee's "broad sense" that the economy is moving "closer" to an appropriate point for a rate cut, but stressed a rate decision will be based on the "totality" of relevant data rather than on one or two data releases on inflation and other determinants.
"The question will be whether the totality of the data, the evolving outlook and the balance of risks are consistent with rising confidence on inflation and maintaining a solid labor market. If that test is met, a reduction in our policy rate could be on the table as soon as the next meeting in September," Powell told a press conference.
"I would just say again that the broad sense of the committee is that we are getting closer to the point at which it will be appropriate to use our policy rate, but we are not quite at that point yet," he added.
In a press release, the Fed underlined steady progress in its efforts to reduce inflation to its objective.
"Inflation has eased over the past year but remains somewhat elevated," it said. "In recent months, there has been some further progress toward the committee's 2 percent inflation objective."
At last month's rate-setting meeting, the Fed pointed out "modest further progress" towards its inflation target, while its median economic projections suggested one rate cut later this year.
In line with progress in the fight against inflation, there has been widespread expectation that the Fed might lower its key rate as early as September.
The Fed reiterated in the release that the committee does not expect it will be appropriate to lower rates until it has gained "greater confidence" that inflation is on a sustainable track toward its target.
On the matter of confidence, Powell noted that the central bank is looking to see "more good data."
"We just want to see more and gain confidence," he said. "We did gain confidence, and more good data would cause us to gain more confidence."
In a nuanced change from its previous emphasis largely on price stability, the unemployment issue appears to have come into greater focus during this week's FOMC meeting.
"Job gains have moderated and the unemployment rate has moved up but remains low," the Fed said in the release.
In last month's press release, the Fed said that "job gains have remained strong, and the unemployment rate has remained low."
The US key rate has remained unchanged since a quarter percentage point increase to the current level in July last year. Before the freeze, the Fed carried out an aggressive rate-hiking campaign launched in March 2022 to bring down inflation.
This week's Fed rate freeze put the gap between the key rates of South Korea and the United States at up to 2 percentage points. (Yonhap)
