[Morning Briefing] Fed keeps interest rates unchanged again... New York stock market rebounds on maintained monetary policy

◆ Fed freezes interest rate at 4.25~4.50%... Seems mindful of Trump's 'trade war' effects

The U.S. Federal Reserve (Fed) emphasized uncertainty about the economic outlook and kept its benchmark interest rate unchanged again on the 19th (local time). The Fed announced that it decided to maintain the benchmark interest rate at the existing 4.25∼4.50% after concluding the two-day Federal Open Market Committee (FOMC) meeting. The Fed has frozen rates for the second consecutive time following the FOMC meeting on January 29, which was the first this year and the first since the inauguration of Donald Trump's second administration. Despite concerns about economic recession in some quarters, the decision to keep rates unchanged appears to consider the slowed pace of inflation reduction and increased economic uncertainty due to President Trump's 'trade war'. With the Fed's decision, the interest rate gap between Korea (2.75%) and the U.S. remains at 1.75% percentage points based on the upper limit. Additionally, the Fed lowered its forecast for U.S. gross domestic product (GDP) growth this year (median value) from December's 2.1% to 1.7%. The expected year-end personal consumption expenditure (PCE) inflation rate was raised to 2.7% (from 2.5%), and the expected year-end 'core PCE inflation rate' (inflation rate excluding food and energy items with high volatility) was raised to 2.8% (from 2.5%). The year-end unemployment rate forecast was also slightly increased from 4.3% to 4.4%.

◆ New York stock market rebounds as Fed maintains 'two rate cuts this year'... Dow up 0.9%

The New York stock market rebounded as the Federal Reserve (Fed) maintained its existing monetary policy trajectory of two rate cuts this year despite the impact of the Donald Trump administration's tariff policies on the 19th (local time). On this day, the Dow Jones 30 Industrial Average closed at 41,964.63, up 383.32 points (0.92%) from the previous session. The Standard & Poor's (S&P) 500 index finished at 5675.29, up 60.63 points (1.08%) from the previous session, while the tech-heavy Nasdaq index closed at 17,750.79, up 246.67 points (1.41%). The Fed announced its 'rate freeze' decision after concluding the March FOMC meeting. The U.S. benchmark interest rate will remain at the current level (4.25~4.50%) at least until the next FOMC meeting in early May. All 11 sectors comprising the S&P500 rose on this day. Energy and technology stocks showed particularly strong gains. Venture Global, the second-largest liquefied natural gas (LNG) producer in the U.S., saw its stock jump 2.85% after obtaining Federal Department of Energy approval for LNG exports. The 'Magnificent 7' (M7) group of large tech stocks, which all closed lower the previous day, successfully rebounded. Nvidia rose 1.81%, Microsoft 1.12%, Apple 1.20%, Google's parent company Alphabet 2.00%, Tesla 4.68%, Amazon 1.41%, and Facebook's parent company Meta 0.29%.

◆ Pension reform likely to pass in plenary session... Opposition to attempt passage of special counsel for First Lady Kim

Attention is focused on whether the parametric pension reform bill and the National Assembly Pension Reform Special Committee formation bill will pass in the National Assembly plenary session on the 20th. Park Ju-min, the Democratic Party chairman of the National Assembly Health and Welfare Committee, Kim Mi-ae, the People Power Party's secretary of the Welfare Committee, Kang Sun-woo, the Democratic Party's secretary, and Cho Kyu-hong, Minister of Health and Welfare, met at the National Assembly yesterday and reached a 'tentative agreement' on pension reform. The ruling and opposition parties reportedly agreed to include the 'bipartisan consensus processing' clause in the special committee formation bill as advocated by the ruling party, and to apply the expansion of childbirth credits to the pension reform bill as advocated by the opposition. The opposition party argued that childbirth credits should be applied from the first child and that 12 months of national pension enrollment period should be recognized. If the ruling and opposition party leadership and members accept and approve the tentative agreement, and if the parametric reform bill is processed in the Welfare Committee's general meeting this morning, it could pass with bipartisan consensus in the afternoon plenary session. The parties had previously agreed on a parametric reform plan to increase the contribution rate, 'the money paid in', to 13% and the income replacement rate, 'the money received', to 43%. Meanwhile, the Democratic Party plans to attempt to pass the 'Special Counsel Bill for First Lady Kim Keon-hee's Allegations' in today's plenary session. The special counsel bill targets investigations into allegations of stock price manipulation by First Lady Kim regarding Deutsche Motors and Sambu Construction, allegations of receiving luxury bags, allegations of lobbying for former Marine Corps 1st Division Commander Lim Seong-geun, allegations related to the relocation of the presidential office, and allegations of route changes for the Yangpyeong expressway.

◆ Police leadership including Jo Ji-ho and Kim Bong-sik begin full trial on sedition charges today

The trial of police leadership charged with sedition related to the December 3 martial law situation officially begins on the 20th. The Seoul Central District Court's Criminal Division 25 (Presiding Judge Ji Gwi-yeon) will open the first trial date for Police Commissioner General Jo Ji-ho (Superintendent General) and former Seoul Metropolitan Police Agency Commissioner Kim Bong-sik (Deputy Commissioner General), who were indicted on charges of performing important duties in sedition. The first trial of former National Police Agency's National Investigation Headquarters Investigation Planning and Coordination Officer Yoon Seung-young (Deputy Commissioner) and former National Assembly Security Chief Mok Hyun-tae (Superintendent), who were suspended from their positions after indictment, will also be conducted simultaneously. As all four were indicted on similar charges, including blockading the National Assembly and organizing arrest teams for key figures during martial law, there is a possibility that the trials may be combined in the future. Unlike preparatory trial dates where defendants are not required to attend, defendants must appear in person for trials, raising interest in whether Commissioner Jo, who is battling blood cancer, will attend the trial in person. Attention is focused on what statements Commissioner Jo and former Commissioner Kim, who declined to provide specific answers to key questions during the Constitutional Court's impeachment trial of President Yoon Suk Yeol citing their ongoing criminal trials, will make in upcoming trials. There is also interest in their positions regarding the answers recorded in their suspect interrogation statements during the prosecution's investigation. Commissioner Jo and former Commissioner Kim were indicted in custody on January 8, and Commissioner Jo was released (with conditions including bail) on January 23 due to health issues. Former Coordination Officer Yoon and former Security Chief Mok were indicted without detention on February 28 for charges of involvement in operating arrest teams and involvement in blockading and infiltrating the National Assembly, respectively.

◆ EU warns Google of fines... Orders Apple to ensure "compatibility with competitors' devices"

The European Union (EU) has warned that it will impose fines on Google's parent company Alphabet for violating the 'Big Tech Anti-Abuse Law'. The EU also ordered Apple to open up its so-called 'iPhone ecosystem' to ensure compatibility with devices of all brands. The EU Commission announced on the 19th (local time) the preliminary results of its investigation, stating that Google Search and Google Play of Alphabet violated the Digital Markets Act (DMA). Alphabet can exercise its right to rebut the preliminary findings. The Commission also said it would discuss corrective measures with Alphabet. However, it warned that "if the final judgment confirms a violation of the law, we will adopt a Non-Compliance Decision." The Non-Compliance Decision includes confirmed investigation results of DMA violations and corresponding sanctions. According to regulations, fines of up to 10% of global sales can be imposed. According to the preliminary investigation results, Google Search violated DMA regulations through 'Self-Preferencing' by giving more favorable exposure to Google's own services in search results for airline tickets and hotel reservations. The Commission pointed out that Google Play, an app store, technically restricts external app developers from informing users about cheaper purchase options or alternative payment methods. The Commission also adopted a separate DMA decision against Apple on the same day. The Commission instructed Apple to improve 'interoperability' to comply with the DMA, ensuring that iPhones and iPads can be compatible with smartwatches, headphones, TVs, and other devices from different brands. In Apple's case, there is no immediate possibility of fines. However, if it fails to comply with the Commission's instructions in the future, it could become subject to violation investigations like Google.

◆ Korean-American Jonny Kim ahead of first space flight: "Prepared for 8 years... Want to inspire next generation"

Korean-American astronaut Jonny Kim (41) of NASA, who will embark on his first space flight next month, expressed on the 19th (local time) that his anticipation for his first space mission is "difficult to express in words." Currently in final training in Star City, Russia, he responded with an emotional voice to a question about 'what he is most looking forward to in this mission' during an online interview hosted by NASA. He continued, "I firmly believe in and support that we can contribute to inspiring the next generation by sharing the scientific research we will conduct on the space station." According to NASA, he will depart for the ISS on April 8 aboard Russia's Soyuz MS-27 spacecraft with Russian cosmonauts Sergei Ryzhikov and Alexei Zubritsky. He will then perform scientific investigations and technology demonstration missions on the ISS for about 8 months before returning to Earth. The ISS, built in 1998 under the leadership of the United States and Russia, is a multinational experimental structure the size of a soccer field that orbits Earth 15.54 times a day at an altitude of 400km. Currently, 13 countries including 11 European countries, Japan, and Canada, in addition to the U.S. and Russia, are participating in its joint operation. In July 2022, NASA and the Russian Federal Space Agency (Roscosmos) signed a spacecraft seat exchange agreement to secure alternative transportation in case of emergencies, allowing each country to carry the other country's astronauts on their spacecraft launched to the ISS.

◆ Clear skies with large temperature difference on Spring Equinox... 'Mild' from afternoon at 15 degrees

Thursday, March 20, the Spring Equinox (春分) when day and night are of equal length, will be mostly clear nationwide with temperature differences of around 15 degrees between day and night. According to the Korea Meteorological Administration, morning temperatures will be around 0 degrees in most parts of the country, and with somewhat strong winds, the perceived temperature will be even lower, making it feel cold. However, temperatures are expected to rise to around 15 degrees from the afternoon, with very large differences between day and night temperatures for the time being, requiring attention to health management during this seasonal transition. The morning low temperatures are expected to range from -4 to 4 degrees, while daytime high temperatures will range from 12 to 17 degrees. The temperature difference between day and night will be around 15 degrees in most parts of the country, and very large at around 20 degrees in the inland areas of Gyeongsang region. The weather will be mostly clear nationwide, with occasional clouds mainly in the central inland and Jeolla inland areas. Between dawn and morning, there may be places in Gangwon inland and mountainous areas where less than 0.1cm of snow flurries. Fine dust concentrations are expected to be 'bad' in the metropolitan area, Gangwon Yeongeo, Chungcheong region, Honam region, and Daegu, and 'moderate' in other regions. Busan and North Gyeongsang are expected to have 'bad' levels in the morning and at night, while Gangwon Yeongdong, Ulsan, and South Gyeongsang will have 'bad' levels from the evening.

Cha Eun-ji, Hankyung.com reporter chachacha@hankyung.com