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(2nd LD) Fed freezes key interest rate for 7th straight time, forecasts one rate cut this year

The U.S. Federal Reserve on Wednesday held its benchmark lending rate steady for a seventh consecutive time and projected one rate cut later this year as it noted "modest further progress" towards its 2 percent inflation target. After the two-day Federal Open Market Committee (FOMC) meeting, the central bank announced the decision to maintain the rate in the 5.25 to 5.50 percent range, a 23-year high. The decision came hours after new data showed inflation eased slightly last month. FOMC members' latest median economic projections showed that the federal funds rate would be cut to 5.1 percent at the end of this year, up from their March forecast of 4.6 percent. The projection signaled one cut this year, two fewer than previously expected. "Inflation has eased over the past year but remains elevated. In recent months, there has been modest further progress toward the committee's 2 percent inflation objective," the Fed said in a press release, noting headway on the inflation front. Policymakers have been se eking clear evidence that inflation is on a sustainable path to its inflation target as they are looking at incoming economic data to find the right timing to begin rate cuts. Ahead of the decision, the U.S. Labor Department said in a new report that the consumer price index, a key gauge of inflation, rose 3.3 percent on a yearly basis in May -- a smaller increase than the 3.4 percent rise in April. The latest reading is slightly below economists' forecast of 3.4 percent. The U.S. key rate has remained unchanged since a quarter percentage point increase to the current level in July. Before the freeze, the Fed carried out an aggressive rate-hiking campaign launched in March 2022 to bring down inflation. This week's Fed rate freeze put the gap between the key rates of South Korea and the United States at up to 2 percentage points. Source: Yonhap News Agency

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