#FedHoldsRates The U.S. Federal Reserve decided not to change its key interest rate in its January 2026 policy meeting — keeping the federal funds rate at 3.50%–3.75%.
This break in rate action follows three consecutive rate cuts in late 2025, and marks a pause rather than a reversal.
The decision was not unanimous — two policymakers preferred another cut.
Why They’re Holding the Rate
The Fed’s rate decision reflects its main dual goals:
1) Inflation management.
Inflation is still above the Fed’s 2% target, so the central bank isn’t comfortable cutting rates further right now.
2) Labor market and economic growth
Economic activity shows solid growth, and the job market is stabilizing, reducing urgency for more cuts.
The Fed’s stance is “data dependent”, meaning future moves will rely on incoming economic data.
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Markets and economists are watching inflation and jobs data closely to anticipate potential rate cuts later in 2026, but they’re not guaranteed soon.