Federal: The US Federal Reserve has opted to leave its benchmark interest rates unchanged following its latest policy meeting, signaling caution as it assesses mixed economic signals. After deliberations held on January 27 and 28, policymakers agreed to maintain the federal funds rate within the range of 3.5 percent to 3.75 percent, pointing to modest job growth, easing volatility in the labor market, and inflation that remains above the central bank’s long-term goal.

Policy Decision Aligns With Market Expectations

In its statement released on January 28, the Federal Open Market Committee confirmed the decision to keep rates at their current level. The move was widely anticipated by financial markets and economists, reflecting a consensus view that the economy does not yet warrant a policy shift. The committee emphasized that holding rates steady supports its broader economic objectives under current conditions.

Dissent Highlights Internal Policy Debate

While the decision enjoyed broad support, it was not unanimous. The committee voted 10–2 in favor of maintaining the existing rate range. Governors Christopher Waller and Adriana Miran dissented, advocating for a 25-basis-point reduction. Their dissent underscored ongoing debate within the Fed about the appropriate pace and direction of future monetary adjustments as economic data evolves.

Powell Signals Confidence in Economic Momentum

Federal Reserve Chair Jerome Powell struck a cautiously optimistic tone during his post-meeting press conference. He noted that the US economy is entering 2026 on what he described as “a firm footing,” citing improved economic momentum compared with the previous meeting. Powell highlighted steady consumer activity and improving financial conditions as reasons for confidence, while stopping short of signaling any immediate policy change.

Labor Market Shows Signs of Stability

Powell also addressed recent labor market trends, observing that while job gains have slowed, conditions appear to be stabilizing. The unemployment rate has shown fewer fluctuations in recent months, suggesting that the labor market may be reaching a more balanced state. According to Powell, the current stance of monetary policy remains well positioned to support continued stability without adding undue pressure.

Data-Driven Approach Remains Central

Reiterating the Fed’s commitment to flexibility, Powell stressed that future decisions will continue to be guided by incoming data rather than a predetermined path. Policy choices will be evaluated on a meeting-by-meeting basis, taking into account shifts in economic growth, inflation trends, and broader financial conditions. This approach, he said, allows the central bank to respond promptly if risks emerge.

Inflation Still Above Long-Term Target

The policy statement acknowledged that inflation remains somewhat elevated relative to the Fed’s long-term objective of 2 percent. While price pressures have eased from earlier highs, officials remain cautious about declaring victory. The committee noted that persistent inflation, combined with subdued job growth, requires careful monitoring before considering further rate adjustments.

Commitment to Dual Mandate Reaffirmed

The Federal Reserve reaffirmed its dedication to its dual mandate of promoting maximum employment and maintaining price stability. Officials said they will continue to evaluate a wide range of indicators, including inflation expectations, labor market data, and global economic developments. The committee also emphasized its readiness to adjust policy if emerging risks threaten progress toward its goals.

Context From Previous Rate Cut

The January decision follows a rate cut implemented at the Fed’s December 2025 meeting, when policymakers lowered the benchmark rate by 25 basis points to the current range. That move marked a cautious step toward easing after a prolonged period of tighter monetary policy aimed at controlling inflation.

Next Meeting on the Calendar

Looking ahead, the Federal Reserve’s next policy meeting is scheduled for March 17–18. Markets and analysts will be watching closely for fresh economic data that could influence whether the central bank maintains its current stance or begins adjusting rates later in the year.