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The Federal Reserve building in Washington, D.C. (Bloomberg) |
The US Federal Reserve held its benchmark lending rate steady for a third consecutive time during a monetary policy meeting on Wednesday, saying inflation has eased over the past year though it still remains elevated.
After the two-day Federal Open Market Committee meeting, the central bank announced the decision to keep the rate between 5.25 and 5.50 percent, and hinted that its hiking campaign -- launched in March 2022 -- may be near or at an end.
FOMC members' latest median economic projections showed that the federal funds rate would be cut to 4.6 percent at the end of next year. The forecast raised the likelihood of the central bank cutting the rate by a quarter percentage point three times next year.
"While we believe our policy rate is likely at or near its peak for this tightening cycle, the economy has surprised forecasters in many ways since the pandemic," Fed Chairman Jerome Powell told a press conference.
But he stressed that the Fed is prepared to tighten policy further if appropriate.
"We are committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation sustainably down to 2 percent over time and to keeping policy restrictive until we're confident that inflation is on a path to that objective," he said.
In a statement on the FOMC meeting, the Fed cited recent indicators suggesting that growth of economic activity has slowed from its strong pace in the third quarter with job gains remaining strong and the unemployment rate staying low.
"Inflation has eased over the past year but remains elevated," it added.
It also said that it would take into account the cumulative tightening of monetary policy and other factors for determining the extent of "any" additional policy firming that may be appropriate to achieve the inflation target.
The word, "any," in the statement -- which did not appear in the Fed's previous statement -- was seen as signaling that the central bank may be done with its tightening stance.
After raising the benchmark rate by a quarter percentage point to the current level at the July meeting, the Fed froze it in the ensuing FOMC meetings in September and November.
The latest Fed rate freeze put the gap between the key rates of South Korea and the United States at up to 2 percentage points. (Yonhap)
