Fed Chair Warsh Says Korea Watch May Exceed Expectations, Holds Rates at 3.75%-4%

Federal Reserve Chair Kevin Warsh said Wednesday his attention to the South Korean economy may far exceed outside perceptions, citing Korea and Japan as key suppliers of inputs for the current technology investment wave. The Fed left its benchmark rate unchanged at 3.75%-4% in a 10-2 vote, with Governors Lisa Cook and Beth Hammack dissenting in favor of a quarter-point hike. Warsh said tracking Korea helps gauge actual U.S. tech investment flows, noting inputs also come partly from Singapore. He cited a roughly 20-year acquaintance with Bank of Korea Governor Shin Hyun-song, dating to discussions during the global financial crisis on deploying central bank balance sheets in emergencies. He offered no specific measures to shield overseas Treasury holders from further balance-sheet reduction. The post-meeting statement described strong economic expansion, resilient spending, solid productivity and capital investment, but inflation still elevated. Warsh said most colleagues do not see the economy as overheated and questioned the view that AI investment is immune to rate moves, pointing to wider credit spreads since September. He is scheduled to attend a Nov. 16 Fed productivity and employment hearing in the San Francisco Bay Area. Balance-sheet working-group findings may reach the FOMC in early next year's first quarter; Warsh declined to commit to a rate path or offer forward guidance absent emergencies.