Anchor: The U.S. Federal Reserve raised its key interest by 50 basis points, bringing the target range to four-point-25 to four-point-five percent. This has further widened the gap with the Bank of Korea's(BOK) rate to a 22-year high of one-point-25 percentage points, prompting the central bank to consider steeper rate hikes next year. 
Choi You Sun reports. 

Report: The U.S. Federal Reserve announced its latest "big step," adding half a percentage point to its benchmark on Wednesday. 

The lending rate now stands at a 15-year high of four-point-25 to four-point-five percent.

Amid weakening inflation, the latest increase is a deceleration by the Fed after four consecutive "giant steps" of 75 basis points. 

Nevertheless, Chairman Jerome Powell suggested that the Federal Open Market Committee(FOMC) will maintain its upward momentum and a vice grip on fiscal policy for some time to offset inflationary pressure.

[Sound bite: Federal Reserve Chairman Jerome Powell]
"With today's action, we have raised interest rates by four and a quarter percentage points this year. We continue to anticipate that ongoing increases in the target range for the federal funds rate will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to two percent over time."

Further rate hikes are also in the offing, as policymakers projected the key rate to reach a median estimate of five-point-one percent by the end of 2023.

[Sound bite: Federal Reserve Chairman Jerome Powell]
"The inflation data received so far for October and November show a welcome reduction in the monthly pace of price increases. But it will take substantially more evidence to give confidence that inflation is on a sustained downward path." 

Following the Fed's move, the Bank of Korea is more likely to take a "baby step" of a zero-point-25-percentage-point rate increase next month, but the widened gap between the two sides has sparked concerns this will lead to an outflow of foreign currency and a crippled Korean won.

Although BOK Governor Rhee Chang-yong last month mentioned a possible peak rate of three-point-five percent next year, up from the current three-point-25 percent, the central bank may set its sights higher to keep pace with the Fed.
Choi You Sun, KBS World Radio News.