Federal Reserve Holds Funds Rate at 3.50–3.75% at First FOMC Meeting of 2026

The Federal Open Market Committee held the federal funds rate at its existing target range of 3.50% to 3.75% at its January 2026 meeting, pausing after three consecutive rate reductions in 2025. The decision marked the first FOMC meeting of the new year and reflected the majority's judgement that it should assess incoming data, the evolving outlook and the balance of risks before making further adjustments, after cuts in September, October and December 2025.

Two committee members dissented in favour of an immediate rate cut. The statement said economic activity had been expanding at a solid pace, the unemployment rate had shown some signs of stabilisation and inflation remained somewhat elevated.

INFLATION ABOVE TARGET

The Federal Reserve's preferred inflation gauge had not returned to the committee's 2% objective heading into the January meeting.

The three consecutive cuts in 2025 had cumulatively reduced the federal funds rate by 75 basis points from 4.25–4.50%.

FORWARD GUIDANCE

The committee did not provide explicit forward guidance on the timing of any future rate reductions, maintaining its stated data-dependent approach.