Fed to slow rate cuts next year amid economic uncertainty

[Anchor]

The U.S. Federal Reserve has rapidly lowered interest rates in the second half of this year.

But why did they say they would adjust the pace next year?

New York correspondent Park Il-jung analyzed the background.

[Report]

The decision to lower the benchmark interest rate was in line with market expectations.

However, Chairman Jerome Powell indicated that the process leading to the conclusion was not easy.

It was not a unanimous decision.

[Jerome Powell/Chairman of the Federal Reserve: "I would say today was a closer call. But we decided it was the right call because we thought it was the best decision."]

While it is necessary to prevent the U.S. job market from cooling further, the better-than-expected economic situation means that the justification for lowering rates is weak.

In the economic outlook released that day, the Fed raised its forecasts for economic growth and inflation for this year and next year, while lowering the unemployment rate.

Additionally, after lowering rates three times since September, the interest rate has dropped by a rapid 1 percentage point in just four months.

This indicates that there is still not enough time to assess the effects of the rate cuts.

Moreover, the new government's policies, such as the tariff imposition plan by President Trump, add to the uncertainty.

[Jerome Powell/Chairman of the Federal Reserve: "It's kind of common sense thinking that when the path is uncertain you go a little bit slower. It's not unlike driving on a foggy night or walking into a dark room full of furniture."]

Ultimately, this means that the Fed will have to be cautious about future rate cuts, and reflecting this, 14 out of 19 Fed officials expect only two or fewer rate cuts next year.

The Fed also predicted that the benchmark interest rate would not fall below 3% even three years from now.

With high interest rates maintained and Trump's policies favoring a strong dollar, it seems unlikely that our exchange rate will drop easily.

This is Park Il-jung from KBS News in New York.