(LEAD) Fed holds key rate steady, projects 1 rate cut this year amid Iran war uncertainty

(LEAD) FOMC-rate decision (LEAD) Fed holds key rate steady, projects 1 rate cut this year amid Iran war uncertainty(ATTN: UPDATES with more info in lead, paras 5-10)By Song Sang-ho WASHINGTON, March 18 (Yonhap) -- The U.S. Federal Reserve on Wednesday left its benchmark interest rate unchanged for the second consecutive time and maintained its forecast of one rate cut this year, as concerns grew over the economic impact of the ongoing U.S.-Israeli war against Iran. During the two-day Federal Open Market Committee (FOMC) meeting, the central bank decided to leave the rate unchanged at the 3.5-3.75 percent range. The pause put the gap between the key rates of South Korea and the United States at up to 1.25 percentage points. The Feds decision to stand pat came as the central bank faced a tough rate-setting decision due to rising oil prices and its potential impact on inflation, and a weak U.S. employment report, which showed a loss of 92,000 jobs last month.According to FOMC members new median economic projection, the federal funds rate is expected to be cut to 3.4 percent at the end of this year -- the same as the December forecast, signaling the possibility of a quarter percentage point cut this year. In a press release on the latest rate decision, the central bank pointed out economic uncertainties stemming from the ongoing conflict in the Middle East. Uncertainty about the economic outlook remains elevated, it said.The implications of developments in the Middle East for the U.S. economy are uncertain. The committee is attentive to the risks to both sides of its dual mandate, it added, referring to the Feds two objectives of achieving maximum employment and inflation at the rate of 2 percent. U.S. gross domestic product is expected to grow by 2.4 percent this year, up from 2.3 percent projected in December, and by 2.3 percent next year, up from the previous forecast of 2 percent, according to the median projection. Personal Consumption Expenditures (PCE) inflation is projected to reach 2.7 percent at the end of the year, up from the December projection of 2.4 percent, and 2.2 percent at the end of next year, up from 2.1 percent projected in December. PCE is a measure of household consumer spending on goods and services in the U.S.This photo, released by the Associated Press, shows Fed Chair Jerome Powell speaking during a news conference at the Federal Reserve Board Building in Washington on Jan. 28, 2026. (Yonhap) sshluck@yna.co.kr(END)