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- The Federal Reserve's Federal Open Market Committee (FOMC) held its target range for the federal funds rate steady at 5.25%-5.50% following its meeting on January 26-27, 2026, citing...
- Recent economic data indicates moderate economic activity, with job gains remaining robust and the unemployment rate at 3.7% as of December 2025, according to the Bureau of Labor...
- The Personal Consumption Expenditures (PCE) price index, the Fed's preferred inflation gauge, increased 2.6% year-over-year in December 2025, according to the Bureau of Economic Analysis.Core PCE, which excludes...
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Federal Reserve interest Rate Decision - January 2026
Table of Contents
The Federal Reserve’s Federal Open Market Committee (FOMC) held its target range for the federal funds rate steady at 5.25%-5.50% following its meeting on January 26-27, 2026, citing continued progress toward its dual mandate of maximum employment adn price stability.
Recent Economic Data and Inflation
Recent economic data indicates moderate economic activity, with job gains remaining robust and the unemployment rate at 3.7% as of December 2025, according to the Bureau of Labor Statistics.inflation, as measured by the Consumer Price Index (CPI), rose 3.1% over the past 12 months ending in December 2025, a slight increase from the 3.0% reported in November, but still below the peak of 9.1% in June 2022. The FOMC continues to monitor inflation closely and remains committed to bringing it back to its 2% target.
The Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge, increased 2.6% year-over-year in December 2025, according to the Bureau of Economic Analysis.Core PCE, which excludes food and energy prices, rose 2.8% over the same period.
FOMC Statement and Future Outlook
In its statement released on January 27, 2026, the FOMC noted that risks to the outlook are balanced. The committee stated it “remains highly attentive to inflation risks” and is prepared to adjust the stance of monetary policy as appropriate. The full FOMC statement provides detailed insights into the Committee’s assessment of the economic situation.
Market participants are currently pricing in a roughly 65% probability of a 25-basis-point rate cut at the March 2026 FOMC meeting, according to data from the CME FedWatch Tool. though, this outlook is subject to change based on incoming economic data.
Impact on Key Sectors
The current interest rate environment continues to impact various sectors of the economy. The housing market has shown signs of cooling, with mortgage rates averaging 6.6% as of january 26,2026,according to Freddie Mac.Business investment remains moderate, and consumer spending has been resilient, supported by a strong labor market. The manufacturing sector has experienced modest growth, with the Institute for Supply Management’s (ISM) Manufacturing PMI at 50.3 in December 2025, indicating slight expansion.ISM’s manufacturing Report provides further details.
- Federal Reserve System: https://www.federalreserve.gov/
- federal Open market Committee (FOMC): https://www.federalreserve.gov/monetarypolicy/fomc.htm
- Jerome Powell: Chair of the Federal Reserve. https://www.federalreserve.gov/about/leadership/jerome-powell.htm