US Fed Raises Interest Rate by 0.25% as Expected... Highest Since 2001 (2nd Report)

The U.S. central bank, the Federal Reserve (Fed), carried out the so-called "baby step" by raising the benchmark interest rate by 0.25 percentage points as expected. This marks the resumption of rate hikes just one month after a pause for breath with a rate freeze.

On the 26th (local time), following the July Federal Open Market Committee (FOMC) regular meeting, the Fed announced in its policy statement that the federal funds rate would be raised from the previous 5.0?5.25% to 5.25?5.5%. As a result, the U.S. benchmark interest rate surged to its highest level since 2001. This is the 11th rate hike since the rate-hiking cycle began in March last year. After raising rates 10 consecutive times, the Fed decided to hold rates steady at the June FOMC meeting to assess the cumulative effects of tightening.

The FOMC stated, "Recent indicators suggest that economic activity is expanding at a more moderate pace than before," and added, "The Committee is paying close attention to inflation risks." Furthermore, it confirmed, "We will continue to assess incoming information and the effects of monetary policy," and "When determining the appropriate range of additional policy firming to return inflation to the 2% target, we will consider the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial conditions."

With this rate hike, the interest rate differential between the U.S. and South Korea (3.50%) widened to 2.0 percentage points.

This content was produced with the assistance of AI translation services.