Fed Freezes Rates for 5th Straight Time; Wall Street Drops on September Hike Outlook

[Anchor]

The U.S. Federal Reserve has frozen its benchmark interest rate once again early this morning (July 30 KST), but the atmosphere is growing ripe for a rate hike. In the U.S., high-tech stocks, including semiconductors that heavily rely on borrowed funds for investment, plunged.

From New York, this is correspondent Kim Beom-joo.

[Reporter]

The U.S. Federal Reserve has kept its benchmark interest rate frozen at the 3.6 percent level.

The Fed has frozen rates at all five meetings held this year, as well as for the second consecutive time since Chair Kevin Warsh took office.

This maintains a rate that is still around 1 percentage point lower than that of South Korea.

However, while the outcome is the same as before, the internal atmosphere is shifting.

While nine of the 12 committee members attending the rate-setting meeting voted in favor of a freeze, three argued for a rate hike.

At the June meeting, the decision to freeze was unanimous, signaling a growing stance that interest rates must be used more aggressively to curb inflation.

Chair Warsh also re-emphasized his commitment to achieving the 2 percent inflation target.

[Kevin Warsh / Fed Chair : The Fed's position is firm. As I've said before, we will achieve price stability.]

Over 70 percent of market experts predict that the Fed will ultimately raise interest rates in September when the next meeting is held.

Weighed down by the possibility of a rate hike, the three major New York stock indices all closed lower, with high-tech companies that heavily leverage capital for massive investments taking a harder hit.

Memory chip giant Micron saw its stock plummet 10 percent, while the Philadelphia Semiconductor Index, which tracks semiconductor-related stocks, dropped 5.3 percent.

[Eric Diton / Wealth Alliance President : Three dissenting votes is by no means a small number. It is clear that a rate hike is imminent, and the market is pricing that in.]

The yield on 30-year U.S. Treasury bonds also surpassed 5.2 percent, reaching a high not seen in nearly 20 years, suggesting that market volatility is likely to persist for a while.

(Camera and reporting by Lee Hee-hoon | Video edited by Kim Yoon-sung)
※ Please note: This article was translated by AI and may contain errors.