On January 28, 2026, the Federal Reserve voted to maintain the federal funds rate at 3.5%–3.75%, pausing a cycle of three consecutive quarter-point cuts. The decision signals a strategic shift as the central bank navigates a “sturdier” economic outlook and unprecedented political friction.

The FOMC upgraded its assessment of economic activity to “expanding at a solid pace,” supported by robust GDP growth (Q3 at 4.4% and Q4 tracking above 5%). Crucially, the Fed removed language that had previously prioritized labor-market risks over inflation. With inflation lingering near 2.8%-3%, stiffened by recent tariff pressures, and the unemployment rate stabilizing, officials indicated that the dual goals of full employment and price stability are now in better balance. Markets now expect the Fed to remain on hold until at least June. The meeting occurred as Chair Jerome Powell enters the final months of his term, which expires in May 2026.

Despite consumer confidence hitting an 11-year low, Powell noted that spending remains high, surprising the committee with its resilience. As the search for the next Fed Chair intensifies, the Fed remains committed to data-dependent independence. Treasury yields rose following the news, as investors adjusted to a “higher-for-longer” reality for the first half of 2026

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Source: https://www.cnbc.com/2026/01/28/fed-rate-decision-january-2026.html