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Federal Reserve Board Chairman Jerome Powell speaks during a news conference at the Federal Reserve in Washington, Thursday. (AP-Yonhap) |
The US Federal Reserve lowered its benchmark interest rate by a quarter-percentage point on Thursday, marking the second consecutive reduction following a jumbo 50-basis-point cut in September.
After the two-day Federal Open Market Committee meeting, the central bank announced the decision to reduce the rate to the 4.50 to 4.75 percent range. It came after Republican flag-bearer Donald Trump won in Tuesday's presidential election over Vice President Kamala Harris.
In a press release, the Fed said that inflation has made progress toward the committee's 2 percent objective but remains "somewhat elevated."
"The committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run," it said.
"The committee judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the committee is attentive to the risks to both sides of its dual mandate," it added.
This week's Fed rate cut put the gap between the key rates of South Korea and the United States at 1.5 percentage points.
During a press conference later, Fed Chair Jerome Powell said that in the near term, this week's US election will have "no effects" on the central bank's policy decisions.
"Many, many things affect the economy, and anyone who writes down forecasts in their job will tell you that the economy is quite difficult to forecast," he said.
"We don't know what the timing and substance of any policy changes will be. We, therefore, don't know what the effects on the economy would be, specifically whether and to what extent those policies would matter for the achievement of our goal variables, maximum employment and price stability," he added.
He went on to say: "We don't guess. We don't speculate, and we don't assume."
"Just in principle, it's possible that any administration's policies or policies put in place by Congress could have economic effects over time that would matter for our pursuit of our dual mandate goals," he said, referring to the Fed's goals of achieving maximum employment and its inflation target.
Trump is seen as wanting the White House to have some say in the Fed's monetary policy decisions. During a media interview last month, he was quoted as saying, "I think I have the right to say I think you should go up or down a little bit," in reference to the benchmark rate.
Asked if he would step down if the president-elect requests his resignation, Powell said, "No."
He also said that a president does not have the authority to fire or demote him.
"Not permitted under the law," he said during the press conference.
FOMC members' new median economic projections showed in September that the federal funds rate would be cut to 4.4 percent at the end of this year -- a hint that the Fed could further lower the rate later this year.
The next FOMC meeting is slated to take place on Dec. 17-18. (Yonhap)
