Anchor: The U.S. Federal Reserve on Wednesday kept its key rate steady but signaled that a possible cut may be on the horizon. In response, the Bank of Korea chief said that the decision reflects a dovish approach by the Fed and that Korea would take its decisions into account, though it would not blindly follow the U.S. central bank’s direction.
Celina Yoon has more. 

Report: The Federal Open Market Committee(FOMC), the policy-setting body of the U.S. Federal Reserve, kept the key rate unchanged in the range of two-point-25 to two-point-five percent on Wednesday.

It chose to freeze the rate despite increasing expectations of a rate cut in the market amid concerns of the impact of the U.S.-China trade war. 

The Fed did appear to leave the door open for such a cut in the future, omitting the word "patient" from its statement regarding changes to interest rate policy.

Additionally, one FOMC member sought a quarter-point rate cut at the meeting, the first documented dissent from a committee member since the confirmation of current Fed Chair Jerome Powell in February last year. 

The U.S. central bank said in a statement that it still sees a sustained expansion of economic activity and strong labor market conditions, but added that uncertainties have increased regarding the outlook.

The Fed added that it will act appropriately to sustain the expansion and that it will closely monitor all related economic metrics.

Bank of Korea(BOK) Governor Lee Ju-yeol said that the FOMC sent a dovish signal with its statement. He told reporters on Thursday that the market seems to be focusing on the fact that eight out of the 17 FOMC members saw the need for a key rate cut within this year.  

He expects the U.S. Fed to monitor the G20 forum, at which a U.S.-China summit will occur on the sidelines, to gauge the direction of trade negotiations between Washington and Beijing.

When asked whether the FOMC decision will lead to South Korea cutting its own key rate, Lee said that any country would take the U.S. Fed’s activities into account since it has a huge impact on international financial markets.

Lee stressed, however, Korea’s central bank does not mechanically follow the decisions made by its U.S. counterpart.

The BOK kept its key rate frozen at one-point-75 percent in its latest rate-setting meeting in May, but Lee has since hinted at a possible rate cut down the road.
Celina Yoon, KBS World Radio News.