Interest Rates Unchanged After Fed Meeting

Federal Reserve Chair Jerome Powell and the Federal Open Market Committee (FOMC) have maintained the federal funds rate at 3.5%-3.75%, defying direct and public demands for cuts from President Trump. This decision, made unanimously by a 10-2 vote on January 28, 2026, signals the central bank’s commitment to prioritizing economic data—such as lingering 2.9% inflation and solid growth—over political pressure. The move positions policy near neutral, offering predictability for markets but sustaining higher borrowing costs for consumers.

Story Highlights

  • FOMC unanimously votes 10-2 on January 28, 2026, to keep federal funds rate at 3.5%-3.75% despite three prior cuts in 2025.
  • Decision resists Trump’s public pressure, including calling Powell a “jerk,” prioritizing data over politics.
  • Inflation lingers at 2.9% PCE due to tariffs, with solid growth and stabilizing labor market justifying the pause.
  • Markets rally on predictability, but borrowers face ongoing high costs amid neutral policy stance.

FOMC Decision Details

The Federal Open Market Committee concluded its January 28, 2026, meeting by maintaining the federal funds rate target at 3.5%-3.75%. This pause followed three consecutive 25 basis point reductions in September, October, and December 2025, totaling 75 basis points. Governors Stephen Miran and Christopher Waller dissented, favoring another cut. Fed Chair Jerome Powell emphasized data-driven decisions during the subsequent press conference. The move positions policy near neutral levels, neither stimulating nor restricting growth.

Economic Context Driving the Hold

Inflation measured by PCE held steady at 2.9% through December 2025, elevated above the 2% target primarily from tariff impacts on goods prices. The U.S. economy exhibited solid growth with mid-2% annual GDP despite quarterly fluctuations and a prolonged government shutdown. Labor markets showed low job gains but stabilizing unemployment rates. These factors align with the Fed’s dual mandate of price stability and maximum employment, prompting caution to avoid reigniting inflationary pressures.

Trump’s Pressure and Fed Independence

President Trump publicly urged Powell to lower rates following recent inflation data, echoing criticisms from his first term and labeling the Fed chair a “jerk.” The FOMC’s resistance underscores the Federal Reserve’s statutory independence, established to insulate monetary policy from short-term political influences. Global bankers like Jamie Dimon have defended this autonomy amid U.S. political tensions. This clash highlights ongoing debates over whether unelected officials should override a president’s economic growth agenda, a concern for those prioritizing accountable governance.

Powell noted in his press conference that current rates suit the Fed’s goals, with tariff effects expected to peak without necessitating hikes. The FOMC statement acknowledged elevated uncertainty, solid growth, and readiness to adjust based on incoming data.

Market and Stakeholder Reactions

Financial markets responded positively, with odds of no March rate change rising to 86% from 82.7% the prior week, reflecting relief over policy clarity. Businesses gain predictability for planning, while borrowers and homebuyers endure steady mortgage rates. Economists like Michael Pearce of Oxford Economics support holding through June due to neutral rates and stabilizing labor. Dissenters Miran and Waller pushed for cuts, but the majority prioritizes caution.

Of 19 FOMC members, 15 project at least one cut in 2026 if inflation approaches 2%, balancing growth without overheating. This wait-and-see approach benefits workers through labor stabilization but sustains higher borrowing costs short-term, impacting families seeking affordability after years of fiscal mismanagement.

Watch the report: FOMC Holds Interest Rates in January Meeting, Road Ahead for 2026

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