Korean central bank expected to pivot to tame inflation, shore up won New US Federal Reserve Chairman Kevin Warsh holds a press conference at the US Federal Reserve in Washington, Wednesday. (Reuters-Yonhap) The US Federal Reserve signaled a higher interest-rate path as it kept its benchmark rate unchanged Wednesday, increasing pressure on the Bank of Korea to move toward monetary tightening.The US central bank left the target federal funds rate at 3.5-3.75 percent, but struck a hawkish tone, citing inflationary pressures and signaling a higher rate path ahead.While the BOK had already been widely expected to raise its benchmark rate by 0.25 percentage point in its July policy meeting, the Fed's hawkish guidance will likely reinforce that expectation.Over the weeks, BOK Gov. Shin Hyun-song has repeatedly signaled the possibility of tightening the grip on monetary policy.Reinforcing that message at an inflation-related meeting on Wednesday, he said, "We will take proactive measures until we are confident that inflation will stabilize at the target level."The stance comes amid persistent inflationary pressures, with consumer prices expected to hover around 3 percent in the second half of the year, above the central bank’s 2 percent target even after an interim ceasefire agreement in the Middle East.If the BOK raises the benchmark rate by 0.25 percentage point next month as widely expected by the market, it would mark the first rate hike since May 2025, when the policy rate was cut from 2.75 percent to 2.5 percent, ending a year-long hiatus.The rate differential between Korea and the US currently stands at 1.25 percentage points based on the upper bound of the Fed's target range. Should the BOK hold rates steady while the Fed delivers a 0.25 percentage point hike, the gap would widen to 1.5 percentage points.The rate differential has remained in the US' favor for nearly four years since US policy rates exceeded Korea's benchmark rate in 2022.A wider interest rate differential would likely add downward pressure on the Korean won, which has already been under strain against the dollar.The won opened at 1,524.2 per dollar on Thursday, weakening 10.8 won from the previous session, as the greenback strengthened after the Fed struck a more hawkish tone."The Federal Reserve has signaled the possibility of raising interest rates to address inflationary pressures at its overnight meeting, following recent rate hikes by the European Central Bank and the Bank of Japan," BOK Senior Deputy Governor Ryoo Sang-dai said at a meeting held Thursday."A shift in the monetary policy stance of major economies is becoming increasingly visible," he said.Markets are increasingly factoring in the possibility of two rate hikes this year."The BOK would raise its benchmark rate in both July and October, lifting the policy rate to 3 percent by the end of the year," Ahn Ye-ha, an analyst at Kiwoom Securities, said.