OAN Staff Katherine Mosack
5:11 PM – Wednesday, January 28, 2026
The Federal Reserve has paused its easing cycle, voting on Wednesday to maintain the federal funds rate at a range of 3.5% to 3.75%. This decision halts a streak of three consecutive quarter-point cuts implemented at the end of last year.
The move to hold rates steady reflects growing uncertainty regarding inflation and labor market stability. Prior to the successive cuts in September, October, and December, the benchmark rate sat between 4.25% and 4.5% — already a significant decline from the 2025 peak of 5.25% to 5.5%.
Fed Chair Jerome Powell characterized the hold as a “cautious approach,” signaling that leadership is prioritizing a data-driven, “wait-and-see” strategy before committing to further adjustments.
“We see the current stance of monetary policy as appropriate to encourage progress toward both our maximum employment and 2% inflation goals,” Powell said at a press conference in Washington, D.C., on Wednesday.
The chairman further noted that the economy continues to expand at a “solid pace,” pointing to the stabilization of the unemployment rate as a sign of underlying resilience.
“While job gains have remained low, the unemployment rate has shown some signs of stabilization,” Powell added.
Labor data released by the Bureau of Labor Statistics earlier this month showed the unemployment rate cooling from 4.6% in November to 4.4% in December.
While the rate has edged higher recently, it remains remarkably low by historical standards.
Meanwhile, the Federal Reserve’s 2% inflation target remains elusive, despite several months of lower-than-anticipated price increases. This week’s decision to hold rates steady was widely expected by markets. Given Powell’s recent commentary, the Fed appears content to remain on the sidelines through the next term.
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