Anchor: The U.S. Federal Reserve left interest rates unchanged on Wednesday as expected, but signaled that it would increase the lending cost by the end of the year. The Fed also said that it would begin from next month to trim its debt holdings of around four-point-five trillion dollars acquired in the years after the 2008 financial crisis.
Kim Bum-soo has more. 
 
Report: 
 
[Sound bite: U.S. Federal Reserve Chairwoman Janet Yellen] 
" ...my colleagues and I on the Federal Open Market Committee decided to maintain the target range for the federal funds rate at one to one-point-25 percent. We also decided that in October, we will begin the balance sheet normalization program that we outlined in June. This program will reduce our securities holdings in a gradual and predictable manner."
 
The U.S. central banking system will begin reducing its four-point-five trillion dollar portfolio of long term government bonds and mortgage backed securities it acquired after the 2008 financial crisis. 
 
Announcing the rate decision on Wednesday, U.S. Federal Reserve Chairwoman Janet Yellen stressed that the move will be gradual in letting a small portion of the balance sheet mature without being replaced.
 
[Sound bite: U.S. Federal Reserve Chairwoman Janet Yellen] 
"By limiting the volume of securities that private investors will have to absorb as we reduce our holdings, the caps should guard against the outsized moves in interest rates and other potential market strains..." 
 
The initial reduction of ten billion dollars a month will rise over the next year to 50 billion dollars a month.
 
The plan has made markets nervous as it could trigger a rise in global rates. It's a problem for the Korean economy, which is dealing with a massive amount of household debt.
 
But Prof. Yang Jun-sok and other economists predicted that the impact will be kept to a minimum. 
 
[Sound bite: Prof. Yang Jun-sok – Economics Dep’t, Catholic Univ. of Korea (English)]
“Because the Fed has never bought or sold these assets at such scale before, the markets are extremely nervous, and the Fed is keeping the sale small at least for the first few months. The expected effect from the sales is a slight increase in the short term and long term interest rates which means a rise in global rates as well, which would affect borrowers including Korean households. However, because the scale is small and the market has been expecting the increase, the rates are expected to rise only minimally. But the markets are worried because this has not been done before.”
 
Bank of Korea Governor Lee Ju-yeol told reporters that the Fed's bond sales will not significantly affect South Korea’s financial market given that they were foreseen.
 
Lee said the central bank will closely monitor market trends, noting that the calculus of the nation's monetary policies could become complicated due to North Korea-related risks and price concerns.
 
Currently, the benchmark lending costs are at the same level in South Korea and in the U.S. Many analysts estimate that the Fed is likely to hike its key rate in December.
Kim Bum-soo, KBS World Radio News.