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Informist, Thursday, Jan. 29, 2026

--US FOMC keeps federal funds rate target range unchanged at 3.50-3.75%
--US FOMC: Economic activity has been expanding at a solid pace
--US FOMC: Inflation remains somewhat elevated
--US FOMC: Uncertainty about economic outlook remains elevated
--US FOMC: 2 Fed officials voted to lower the target range by 25 bps
--US FOMC:Committed to support maximum employment, return inflation to 2% aim
--US FOMC: Job gains have remained low
--US FOMC: Unemployment rate has shown some signs of stabilisation

MUMBAI – After three consecutive rate cuts, the US Federal Open Market Committee Thursday left the federal funds target rate range unchanged at 3.50-3.75%. However, two officials--Stephen I. Miran and Christopher J. Waller--voted in favour of a 25-basis-points rate cut.

The US central bank decided to hold rates in the middle of geopolitical uncertainties and comments from US President Donald Trump demanding rate cuts from the Federal Reserve. The move was widely expected by market participants. Indicating his dislike at the pace of rate cuts, Trump has called Fed chairman Jerome "too late" Powell.

The committee's statement did not change much from the previous meeting, highlighting that uncertainty about the economic outlook remained high. "Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate," the statement said. 

The committee said it seeks to achieve maximum employment and inflation at the rate of 2% over the longer run. However, inflation remains somewhat elevated.

Data released last week showed core inflation in the US rose 2.8% on year in November, from 2.7% in October, largely in line with expectations and above the US Federal Reserve's target of 2%. The data was delayed because of the record 43-day government shutdown through October. Jobless claims in the US rose by 1,000 to 200,000 in the week ended Jan. 17, against estimates of 208,000.

The FOMC also said that economic activity in the US has been expanding at a solid pace. US GDP grew 4.4% in the third quarter, higher than estimates of a 4.3% rise. The committee also said that job gains in the economy have remained low, and the unemployment rate has shown some signs of stabilisation.

The committee said it remains cautious of any uptick in data. "In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook," the FOMC statement said. "The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals."

In the post-policy press conference, Powell said the US economy grew at a solid pace over the past year and is entering 2026 on a strong footing. He noted that the unemployment rate has begun to show signs of stabilising after softening earlier, while consumer spending has remained resilient.

Powell reiterated that the Fed will make decisions based on data "meeting to meeting." This policy meeting is Powell's third-to-last as Fed chair. His term ends in May. Talking about tariffs, Powell said that over the course of 2026, the effect of tariffs will push inflation higher initially but it will normalise in due course.  End

Reported by Kabir Sharma

Edited by Ashish Shirke

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