Seoul: The U.S. Federal Reserve announced on Wednesday that it has reduced its benchmark interest rate by a quarter percentage point, marking the third consecutive rate cut. This decision comes as policymakers face divisions over the rate adjustment amidst a weakening labor market and persistent inflation.

According to Yonhap News Agency, the Federal Open Market Committee (FOMC) concluded its two-day meeting with a decision to lower the key rate to a range of 3.5-3.75 percent. This reduction has widened the interest rate gap between South Korea and the United States to as much as 1.25 percentage points. The move aligns with the FOMC members' new median economic projection, which anticipates that the federal funds rate will decrease to 3.4 percent by the end of next year, consistent with September's forecast.

Policymakers within the Fed were divided over this rate cut. Some officials opposed the reduction as inflation rates remain significantly above the central bank's 2 percent target. Others supported the cut as a measure to support the labor market, which continues to show signs of weakness. The decision-making process was further complicated by delays in economic data releases, a result of the ongoing government shutdown.