Fed Raises Interest Rates by 0.25% After 38 Months… Leaves Door Open for Further Hikes

[Anchor]

The U.S. central bank has raised its benchmark interest rate for the first time in 3 years and 2 months. Citing excessively high and prolonged inflation, it has also left the door open for additional rate hikes. President Trump, who had demanded rate cuts, strongly criticized the Federal Reserve Board.

Our correspondent Kim Hyunwoo reports from New York.

[Reporter]

On the 16th local time, the U.S. Federal Reserve unanimously decided to raise the benchmark interest rate by 0.25 percentage points.

With this move, the U.S. benchmark interest rate now stands in the 3.75 to 4.0 percent range.

The Fed, which had frozen interest rates for five consecutive times this year, has shifted its stance toward tightening.

This marks the first time the U.S. central bank has raised interest rates in about three years since 2023.

Federal Reserve Chair Kevin explained that the rate hike was implemented because inflation is severe due to high inflation rates, alongside growing geopolitical uncertainties.

[Kevin / Chair, Federal Reserve: Our primary focus is anchored on price stability. The plain fact is that inflation is too high and has remained high for far too long.]

Twelve out of 18 Fed officials projected the expected interest rate for the end of this year to be between 4 and 4.25 percent, while four projected it at 4.25 to 4.5 percent, hinting at the possibility of additional rate hikes within the year.

They also forecasted that if inflation is not brought down to the target level of 2 percent, 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, which will likely increase interest burdens on consumers.

President Trump criticized that the benchmark interest rate should fall below 1 percent and claimed the Fed made a political decision.

[Donald Trump / U.S. President: The Federal Reserve Board is very hostile and overly political. They are making a mistake.]

Chair Kevin stated he had nothing to say regarding Trump, who has demanded rate cuts, but compared the independence of the Fed to staying in lane on a two-way road.

This is interpreted as a vow to fend off Trump's political pressure to lower interest rates and to maintain the independence of monetary policy.

(Photo: Yonhap News)

(Reported by Lee Hee-hoon | Video Editing by Kim Byeong-jik)

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