(ATTN: ADDS Warsh's remarks, other details throughout; CHANGES photo)

By Song Sang-ho

WASHINGTON, July 29 (Yonhap) -- The U.S. Federal Reserve on Wednesday held its benchmark interest rate steady in a 9-3 decision amid continuing concerns over the economic impact of renewed fighting in the Iran war and U.S. President Donald Trump's calls to lower borrowing costs.

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, marking the fifth consecutive pause. The rate decision left the gap between the key interest rates of South Korea and the United States at up to 1 percentage point.

During a press conference, Fed Chair Kevin Warsh reaffirmed the central bank's 2 percent inflation target to deliver price stability, while highlighting that the U.S. economy is showing "impressive resilience" despite "recent shocks."

"For some households, businesses and market professionals, five years of high inflation have left a mistaken impression -- that's hard to shake -- that the Fed's implicit inflation target was somehow above 2 percent," he said.

"Let me reiterate (that) there is no soft inflation target. There is no soft implicit target. Not on this committee's watch. There is only a target, and it's 2 percent," he added.

Asked whether a rate increase would be the best remedy if inflation remained too high, Warsh said that a rate adjustment could be "part of that solution," but added that he would not see it "in isolation."

He also explained the Fed's assessment of the economy, while noting that inflation remains "elevated" relative to the 2 percent goal.

"The economy's output is solid, CAPEX and productivity are strong. The labor market is solid, steady," he said. CAPEX stands for capital expenditure, which means corporate spending on long-term assets, such as equipment and buildings.

At the rate-setting meeting, the three participants -- Beth Hammack, Neel Kashkari and Lorie Logan -- preferred to raise the rate by a quarter percentage point, according to the Fed.

Touching on the two-day FOMC discussions, Warsh said there was "a real family fight."

"There was a lot more interaction between and among my colleagues. It was a real family fight," he said. "My view, which you've long heard, is that's the better way to get policy right. That's our North Star."

This week's rate decision came after Trump renewed his calls for the Fed to lower the rate during a press availability earlier this week, saying that the U.S. should have "the lowest interest rate in the world."

sshluck@yna.co.kr

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