Fed Holds Rates Steady; Powell Vows to Remain Governor Amid Political Pressure

The Hankyoreh, a South Korean newspaper, reports on the US Federal Reserve's decision to maintain its benchmark interest rate and Federal Reserve Chair Jerome Powell's firm stance against political interference. The article notes that the Fed held rates steady at 3.50-3.75%, a move influenced by escalating inflation fears driven by the international oil price surge following the conflict with Iran.

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I will remain on the board of governors for a time even after my successor is in place.

Powell's declaration to remain a governor even after his chairmanship ends is presented as a direct challenge to the Trump administration's efforts to 'shake up' the Fed. This move is particularly significant as it thwarts President Trump's immediate opportunity to appoint a loyalist to the Fed's board. The article highlights Powell's strong criticism of 'legal attacks' on the Fed, which he argues threaten its ability to conduct monetary policy free from political considerations.

From a South Korean perspective, the Fed's interest rate decision has direct implications for the domestic economy. The article points out that the current rate differential between the US and South Korea (2.50%) remains at 1.25% on the upper end, influencing capital flows and exchange rates. The internal dissent within the FOMC, with four dissenting votes, is also noted, signaling potential future policy shifts and internal debates within the Fed.

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A series of legal attacks on the Fed are threatening our ability to conduct monetary policy without political considerations. These attacks are bruising the institution.

The article emphasizes Powell's commitment to transparency and his decision to stay on as a governor until his term ends in January 2028, a move unprecedented since 1948. This ensures a degree of continuity and independence at the helm of US monetary policy, which is closely watched by global economies. The Hankyoreh frames Powell's actions as a defense of institutional integrity against political pressure, a narrative that resonates with concerns about political influence on economic policy worldwide.

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I will not leave the board until the investigation is transparent and completely concluded.