(LEAD) U.S. Fed holds key lending rate steady, pencils in 2 cuts this year

By Song Sang-ho

WASHINGTON, March 19 (Yonhap) -- The U.S. Federal Reserve on Wednesday kept its benchmark interest rate unchanged and signaled the possibility of two rate cuts this year, as it is cautiously assessing the ramifications of U.S. President Donald Trump's tariff policies and other measures that have stoked economic uncertainties.

After the two-day Federal Open Market Committee (FOMC) meeting, the central bank announced the decision to hold the rate steady at the 4.25 to 4.50 percent range. The pause on cuts came after a quarter-percentage-point reduction each in December and November, and a 50-basis-point cut in September.

FOMC members' new median economic projection showed the federal funds rate would be cut to 3.9 percent at the end of the year, to 3.4 percent next year and to 3.1 percent in 2027. In their previous December projection, they also forecast the rate would be lowered to 3.9 percent this year, penciling in two cuts for 2025.

In addition, the latest median projections indicated that Personal Consumption Expenditures inflation may reach 2.7 percent at the end of the year, higher than the December forecast of 2.5 percent.

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.

sshluck@yna.co.kr
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