Kiwoom Securities forecasts additional 25bp Fed policy rate increase in December

In a report issued on the 29th, Kiwoom Securities forecast a strong likelihood that the Fed would raise its policy rate by another 25bp in December. It assessed the October rate hold as a cautious response intended to examine economic data and the effects of existing tightening.

FactSnap

October 29, 2026 at 12:00 PM

Kiwoom Securities issued a report on the 29th forecasting a strong likelihood that the Fed would raise its policy rate by another 25bp in December (1bp equals 0.01 percentage points). It assessed the October hold following September's 25bp increase as a cautious response intended to examine economic data and the effects of existing tightening, and to review changes in economic and financial conditions before another increase.

The Fed kept its policy rate at 3.75–4.00% per year at the October FOMC meeting held on the 28th, local time. Two of the 12 members opposed the hold, arguing for a further increase.

Kiwoom Securities analyst Kim Yu-mi said high international oil prices and rising energy prices could push US headline consumer price inflation higher again from the end of the year into early next year. Kim explained that, with consumption and investment remaining robust, the case for further tightening to achieve the price stability target could strengthen if energy price increases spread to other goods and services.

Kim explained that the emphasis on examining additional economic data suggested the possibility of maintaining the tightening stance while assessing the effects of existing policy and moderating the pace, rather than raising rates aggressively. Kim also interpreted the move to reduce some regular opportunities for rate decisions as an intention to assess economic conditions, inflation trends and financial market conditions comprehensively.

The Federal Reserve, the U.S. central bank, announced on the 28th, local time, that it had decided to hold its benchmark annual interest rate at 3.75–4.00%. The decision came at a two-day Federal Open Market Committee (FOMC) meeting that began the previous day.

The Fed raised its benchmark rate by 0.25 percentage point last month. After holding rates steady five consecutive times this year, it shifted toward monetary tightening last month with its first increase in three years and two months.

The Fed said the vote on the decision to hold rates was 10–2. Fed Governor Lisa Cook and Cleveland Federal Reserve Bank President Beth Hammack dissented, advocating a 0.25-percentage-point increase.

The Fed assessed in its statement that economic activity was expanding at a strong pace, despite continued high uncertainty arising from geopolitical conditions and other factors. It described U.S. spending, productivity growth and capital investment as solid, with employment growth keeping pace with labor force growth and little change in the unemployment rate.

On prices, the Fed assessed inflation as still elevated. Its stated inflation target is 2%.

The hold left the gap between South Korea's 3.00% benchmark rate and the U.S. benchmark rate at 1.00 percentage point, measured against the upper end of the U.S. range.

Fed announces decision to hold benchmark rate at 3.75–4.00%

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