The Federal Reserve, the central bank of the United States, raised its benchmark interest rate by 0.25 percentage point on the 1st (local time). The Fed, which has taken a ‘baby step’ amid slowing inflation, announced that it would maintain its policy of raising interest rates for the time being.
On this day, the Fed held its first regular meeting of the Open Market Committee (FOMC) this year and announced that it would raise the base rate to 4.50-4.75%, 0.25 percentage point higher than the current rate of 4.25-4.50%.
As a result, the US benchmark interest rate reached its highest level in about 15 years since October 2007.
The difference in interest rates between Korea and the US is 1.25 percentage points. Previously, the Monetary Policy Committee of the Bank of Korea raised the base rate by 0.25 percentage point from 3.25% to 3.50% on the 13th of last month.
The Fed’s rate hike is the smallest in 10 months. The Fed has been raising interest rates since March last year to curb inflation, which reached its highest level in 40 years.
In particular, the ‘Giant Step’ (0.75% point interest rate hike) was carried out four times in June, July, September and November of last year. At the last FOMC meeting in December of last year, the rate of interest rate hike was lowered to 0.50 percentage points in line with the slowdown in inflation, and the pace was adjusted.
The Fed announced on the same day that it would keep raising interest rates for the time being. In his statement, the Fed said, “Inflation has eased but is still on the rise,” and “continued rate hikes are necessary.”
The Fed set its inflation target for this year at 2%, the same as last year.