January 28, 2026—The Federal Open Market Committee (FOMC) wrapped up its first meeting of the year this Wednesday by holding interest rates steady at 3.50%–3.75% as expected. This was the Fed’s first interest rate pause following three consecutive cuts late last year. The vote was 10-2, with two members, Stephan Miran and Christopher Waller, preferring another 25 basis point cut. At his post-meeting press conference, Fed Chair Jerome Powell reiterated that there was “broad support” for holding the rates, including among non-voters.
In recent speeches, policymakers have acknowledged that while inflation has moderated, only “slightly elevated,” the latest Consumer Price Index of 2.7% still remains above the FOMC’s long run target of 2.00%. Some economists have taken the committee’s decision to hold rates steady in this January meeting as an indicator of its expected path forward, but FOMC officials framed their actions as a “cautious necessity” rather than a full shift in direction. In his remarks, Powell cited a need for more data before pursuing further action. He stated that “monetary policy is not on a pre-set course,” adding that while they balance the risks posed by a softer labor market and persistent inflation, that the FOMC will make their decisions on a meeting by meeting basis.
Powell also suggested that the labor market may be stabilizing a bit, with the unemployment rate currently at 4.4%. Those comments on a stabilizing labor market came as Powell faces questions about his own future at the Fed, with his term as Chair ending in May while his Board seat runs until 2028. While Powell has not commented much on the Fed Chair race, he did state in a December 2025 meeting that his focus for the remainder of his term and his hope for his successor is an “economy in good shape” with inflation back at 2% and a strong labor market.