[Anchor]
The US central bank has raised its benchmark interest rate for the first time in three years and two months, while leaving the door open for further hikes. The primary background involves inflation anxieties driven by the prolonged war in Iran and soaring oil prices. President Trump has criticized the Federal Reserve Board, demanding that rates be lowered below 1 percent.
Kim Hyun-woo reports from New York.
[Reporter]
On the 16th local time, the US Federal Reserve unanimously decided to raise the benchmark interest rate by 0.25 percentage points.
With this move, the US benchmark interest rate is now in the range of 3.75 to 4.0 percent.
The Fed, which had frozen interest rates for five consecutive times this year, has pivoted toward a tightening stance.
This marks the first time the US central bank has raised its benchmark interest rate in about three years since 2023.
Fed Chair Kevin Warsh explained that the rate hike was implemented due to high inflation rates and severe inflation, coupled with growing geopolitical uncertainties.
[Kevin Warsh / Chair, Federal Reserve : Our primary focus is on price stability. The clear fact is that prices are too high and have remained high for too long.]
Twelve out of 18 Fed officials projected the expected interest rate for the end of this year at 4 to 4.25 percent, while four projected 4.25 to 4.5 percent, hinting at the possibility of additional hikes within the year.
Furthermore, the Fed forecasted that if inflation is not reined in to the 2 percent target level, rates could be raised once more next year.
The market reacted sensitively.
All three major New York stock indices closed lower, and the 10-year Treasury yield fluctuated around the psychological resistance level of 5 percent.
In addition, major banks are expected to promptly raise prime rates, increasing the interest burden on consumers.
President Trump criticized the Fed for making a political decision, asserting that the benchmark interest rate should be lowered below 1 percent.
[Donald Trump / US President : The Federal Reserve Board is very hostile and overly political. They are doing the wrong thing.]
Regarding Trump, who has demanded rate cuts, Chair Warsh stated he had nothing to say, but compared the Fed's independence to staying in lane on a two-way road.
This is interpreted as an intention to block Trump's political pressure to lower rates and protect the independence of monetary policy.
(Camera reporting: Lee Hee-hoon, Video editing: Kim Byung-jik)
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