Washington: The U.S. Federal Reserve on Wednesday lowered its benchmark interest rate by a quarter percentage point in the first reduction this year, following mounting pressure from President Donald Trump to cut the rate to help boost the economy.

According to Yonhap News Agency, following the two-day Federal Open Market Committee (FOMC) meeting, the central bank decided to lower the key rate to the 4-4.25 percent range. It marked the first reduction since the Fed announced a 25-basis-point cut in December last year.

FOMC members' new median economic projection showed that the federal funds rate will be cut to 3.6 percent at the end of the year, down from the June projection of 3.9 percent. It also forecasts that the rate will be reduced to 3.4 percent at the end of next year, 0.2 percentage points lower than the previous projection.

The Fed also projects U.S. gross domestic product to grow by 1.6 percent this year, up from 1.4 percent projected in June.

In addition, the median projection showed that Personal Consumption Expenditures (PCE) inflation will reach 3 percent at the end of the year, the same as the June forecast. PCE is a measure of household consumer spending on goods and services in the U.S.

This week's rate decision put the gap between the key rates of South Korea and the United States at up to 1.75 percentage points.

The rate decision came as Trump has raised pressure on Fed Chair Jerome Powell to lower the rate amid lingering concerns that Trump's tariff policy could lead to higher prices. On Monday, the president renewed calls for a "bigger" reduction.

"'Too Late' MUST CUT INTEREST RATES, NOW, AND BIGGER THAN HE HAD IN MIND. HOUSING WILL SOAR!!!" Trump wrote on Truth Social.