The US Federal Reserve maintained its key interest rates at 3.5-3.75% in its January meeting, citing low job gains and high inflation. The FOMC vote was 10-2, with two members dissenting in favour of a rate cut of 25 basis points.
The US Federal Reserve, in its latest policy meeting held on January 27-28, decided to keep its key benchmark interest rates unchanged at 3.5 to 3.75 per cent, citing low job gains, signs of stabilisation in the labour market, and inflation that remains somewhat elevated.
In its policy statement released on January 28, the Federal Open Market Committee (FOMC) said, “In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 per cent.” The decision was largely in line with expectations. The FOMC voted 10-2 to leave the federal funds rate target range unchanged at 3.5-3.75 per cent. Governors Waller and Miran dissented from the decision, casting a dovish dissent in favour of a 25-basis-point rate cut.
Fed Chair’s Economic Outlook
Commenting on the economic outlook, US Fed Chair Jerome Powell struck a modestly hawkish tone during his press conference, particularly regarding growth. Powell said the US economy is coming into 2026 “on a firm footing” and noted that “the outlook has clearly improved since the last meeting.” He also pointed to signs of stabilisation in the labour market and said that monetary policy is “well positioned” at the current level. Powell added that the central bank would continue to take a data-dependent approach, making policy decisions “meeting by meeting” based on evolving economic conditions.
Data-Dependent Approach and Mandate
The Federal Reserve reiterated its strong commitment to achieving its dual mandate of maximum employment and price stability, with a long-term inflation objective of 2 per cent. The policy statement noted that inflation remains somewhat elevated, while job gains have remained low and the unemployment rate has shown some signs of stabilisation.
“In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks,” the Fed said.
The Committee further stated that it would continue to closely monitor a wide range of information, including labour market conditions, inflation pressures and expectations, as well as financial and international developments. It also said it stands ready to adjust its monetary policy stance if risks emerge that could impede achieving its goals.
Meeting Context and Schedule
In its previous meeting in December 2025, the US Federal Reserve had cut its key benchmark interest rates by 25 basis points, bringing them to the current range of 3.50 per cent to 3.75 per cent.
The next meeting of the US Federal Reserve is scheduled to be held on March 17-18.
(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)