(LEAD) U.S. Fed leaves key interest rate unchanged, still projects 2 cuts this year

(ATTN: RECASTS headline, lead; UPDATES throughout)
By Song Sang-ho

WASHINGTON, June 18 (Yonhap) — The U.S. Federal Reserve on Wednesday held its benchmark interest rate steady and continued to project two rate cuts this year, as it remains in a wait-and-see mode to assess the impact of President Donald Trump’s tariff policies and the deepening Israel-Iran conflict.

Following the two-day Federal Open Market Committee (FOMC) meeting, the central bank decided to keep the key rate at the 4.25-4.50 percent range, as Trump has been ratcheting up pressure on Fed Chair Jerome Powell to lower the rate.

FOMC members’ new median economic projection showed the federal funds rate would be cut to 3.9 percent at the end of the year — the same as the March projection. But it forecasts the rate would be reduced to 3.6 percent at the end of next year, 0.2 percentage points higher than the previous forecast.

The Fed also projects the United States’ gross domestic product to grow by 1.4 percent this year, down from 1.7 percent projected in March.

In addition, the median projection indicated that Personal Consumption Expenditures (PCE) inflation could reach 3 percent at the end of the year, higher than the March forecast of 2.7 percent. PCE is a measure of household consumer spending on goods and services in the U.S.

During a press availability hours ahead of the rate decision, Trump criticized Powell as a “stupid person,” arguing that the borrowing rate should be at least 2 percentage points lower.

The Fed paused rate cuts in January, March and last month following a quarter percentage point reduction in December.

This week’s rate decision has widened the gap between the key rates of South Korea and the United States at up to 2 percentage points.