Business · Economy · 3 hrs ago
South Korean analysts say Fed rate hold does not end tightening
The US Federal Reserve kept its benchmark rate unchanged at its October meeting.
The decision had 10 votes in favour, while two officials wanted a 0.25 percentage-point increase.
South Korean analysts say the pause is not proof that rate hikes are over, as the Fed is still assessing the effects of earlier increases.
Most analysts expect another rate increase in December, though they say financial market stress could delay it.
The Fed described US economic activity as strong but also said inflation expectations were stable and demand pressures limited.
The meeting was broadly in line with market expectations, which analysts said could ease pressure on South Korean shares, with semiconductor and IT hardware stocks among those that might recover.
Bond investors are watching US long-term rates, and forecasts for how long Fed tightening will continue differ.
South Korean securities analysts said the Federal Reserve’s October rate hold did not mean its tightening cycle had ended.
Most analysts expected another rate increase in December, while views differed on whether the Fed would raise rates again after that.
The Fed’s decision to hold rates was supported by 10 of 12 committee members; two officials backed a 0.25-percentage-point increase.
Analysts said the Fed had raised its assessment of US economic growth but also noted stable inflation expectations and limited demand-side price pressure.
They said US long-term bond yields and financial-market conditions could affect the outlook, while the Fed’s decision broadly matched market expectations.
- Who
- South Korean securities analysts assessed the Federal Reserve’s decision.
- What
- The Fed held its policy rate, and analysts said this did not signal the end of tightening. Most expected another increase in December.
- When
- The Fed’s October FOMC meeting; analysts discussed the decision on October 29, 2026.
- Where
- The United States; the analysts’ assessments were reported in South Korea.
- Why
- Analysts pointed to two officials’ calls for a rate increase and the Fed’s stronger assessment of economic growth, while noting that the Fed also described inflation pressures as limited.
This story does not have two clearly opposing sides.
The Federal Reserve held its policy rate, with 10 of 12 members supporting the decision and two backing a 0.25-percentage-point increase.
South Korean securities analysts assessed the rate hold and most forecast another increase in December.
- Vote
- 10 of 12 members supported holding rates; two supported a 0.25-percentage-point increase.
- Next expected increase
- December 2026, according to most analysts cited.
- Hana Securities forecast
- Rate increases in December 2026 and March 2027.
- Hanwha Investment & Securities forecast
- One increase in December 2026, then rates on hold in 2027.
- US Treasury yields
- The 2-year yield fell after the FOMC; the 10-year yield rose.
1 source
What people are saying
It is too early to interpret this hold as the end of the rate-hike cycle, given that there were dissenting votes for an increase and the assessment of the economy was raised.
The recent declines in semiconductors and the domestic stock market are excessive.
The Fed intends to maintain a tightening stance so that long-term inflation expectations do not rise, while being wary of excessive tightening.
This meeting was a more dovish event than expected.