Washington: The U.S. Federal Reserve on Wednesday held its benchmark interest rate steady for the third consecutive time, citing "elevated" inflation and a "high level" of economic uncertainty stemming from the ongoing Middle East conflict.
According to Yonhap News Agency, the central bank decided to leave the rate unchanged at the 3.5-3.75 percent range during the two-day Federal Open Market Committee (FOMC) meeting. This was likely to be the last rate-setting meeting under Chair Jerome Powell as his chairmanship is set to expire on May 15.
During a press conference, Powell indicated he would remain as a Fed governor "for a period of time," but plans to "keep a low profile." He emphasized his commitment to staying on the Fed board until an investigation into the renovation of the Fed headquarters is "well and truly" over.
The decision resulted in a gap between the key rates of South Korea and the United States of up to 1.25 percentage points. Powell noted that inflation has moved and is elevated, partly due to the recent increase in energy prices. He also highlighted that developments in the Middle East are contributing to economic uncertainty.
The pause in rate changes came as U.S. consumer prices in March rose 3.3 percent from a year earlier, marking the largest annual increase since May 2024. Oil prices have surged amid the economic ramifications of the U.S.-Israeli war against Iran.
Of the 12 FOMC members, three did not support the inclusion of an "easing bias" in the FOMC statement, though they agreed to maintain the current rate. One member voted against the pause, preferring a quarter percentage point rate cut.
Powell stated that the central bank is "at the high end of neutral or perhaps mildly restrictive," which he believes is "just the right place to be." He suggested that the bank can wait and see how things develop before making further decisions.
The press meeting was Powell's last as Fed chair, as U.S. President Donald Trump's nominee for the top post, Kevin Warsh, is undergoing a Senate confirmation process. On Wednesday, the Senate Banking Committee voted to advance Warsh's nomination for a final confirmation vote.
Powell reflected on Trump's repeated criticisms for not lowering interest rates quickly and legal actions concerning the central bank. He expressed concern that these attacks could undermine the institution's ability to conduct monetary policy without political influence.
Powell's term as Fed chair is set to end next month, but his role as a Fed governor will continue through January 2028.