Federal Reserve raises interest rates for the first time in three years

The U.S. Federal Reserve has raised its benchmark interest rate by 0.25 percentage points, setting the target range at 3.75% to 4.00%. This unanimous decision marks the first rate hike in three years, driven by rising energy prices due to Middle East conflicts and stronger-than-expected consumer spending.

While the hike aims to curb inflation, it increases borrowing costs for mortgages, auto loans, and corporate financing. In South Korea, the decision is expected to exert upward pressure on the KRW-USD exchange rate, potentially raising import costs for oil and raw materials. This may limit the Bank of Korea's ability to lower domestic interest rates as it monitors capital movements and currency stability.