US rate path uncertain amid inflation, Mideast tension: finance ministry

South Korea's First Vice Finance Minister Lee Hyoung-il chaired discussions with financial authorities after the US Federal Reserve held its benchmark interest rate at 3.5-3.75 percent for the fifth consecutive time, leaving the rate gap between South Korea and the US at up to 1 percentage point. The finance ministry said the US rate path remains uncertain due to persistent inflation and Middle East geopolitical tensions, despite solid US economic momentum driven by AI-related investment.

The path of key interest rates in the United States appears to remain uncertain due to persistent inflation and geopolitical tensions in the Middle East, the finance ministry said Thursday. First Vice Finance Minister Lee Hyoung-il chaired discussions with officials from financial authorities, including the Bank of Korea, after the US central bank kept its benchmark interest rate unchanged at a range of 3.5-3.75 percent overnight. The decision marked the fifth consecutive pause, leaving the gap between the key interest rates of South Korea and the US at up to 1 percentage point. "The participants noted that the US economy is maintaining solid momentum, with business facility investment also remaining robust, led by AI-related investment," the finance ministry said. "However, they also assessed that the rate path may remain uncertain, considering high inflation in the United States and Europe, along with geopolitical instability in the Middle East," it added. The participants also vowed to continue monitoring the monetary policies of major countries, along with trends in global oil prices. Yonhap