Central Bank Keeps Benchmark Range At 3.5%–3.75% Despite White House Pressure; Two Officials Dissent In Favor Of A Quarter-Point Cut
Wednesday, January 28, 2026, 4:00 P.M. ET. 5 Minute Read, By Haylee Ficuciello, Economy & Finance Editor: Englebrook Independent News,
WASHINGTON, DC.- The Federal Reserve on Wednesday voted to hold its benchmark interest rate steady, keeping the target range for the federal funds rate at 3.5% to 3.75%, as Chair Jerome Powell said the U.S. economy is entering 2026 “on a firm footing” even as inflation remains above the central bank’s long-run target.
The decision was announced at 2:00 p.m. Eastern Time following the conclusion of the Federal Open Market Committee’s (FOMC) two-day policy meeting and came amid public pressure from President Donald Trump, who has repeatedly urged the Fed to move faster and reduce interest rates.
In its official statement, the FOMC said that “economic activity has been expanding at a solid pace,” while acknowledging that job gains have been low, the unemployment rate has shown signs of stabilizing, and inflation remains somewhat elevated.
Powell echoed that assessment during his opening remarks at the Fed’s press conference, stating that the U.S. economy “expanded at a solid pace last year” and “is coming into 2026 on a firm footing.”
A Pause Following Recent Rate Cuts;
Wednesday’s decision marks a pause following a series of interest-rate reductions late last year. Powell confirmed that the Federal Reserve lowered its benchmark rate by a total of 75 basis points over the previous three meetings, and said policymakers believe the current stance of monetary policy is “appropriate” to support continued progress toward the Fed’s dual mandate.
“The Committee is well-positioned to respond to any changes in the outlook,” Powell said.
In its statement, the Fed emphasized that future decisions will remain data-dependent, noting it will “carefully assess incoming data, the evolving outlook, and the balance of risks” when determining the extent and timing of additional policy adjustments.
The federal funds rate influences borrowing costs throughout the economy, including interest rates on credit cards, auto loans, business lending, and mortgages, making the Fed’s decisions closely watched by households, investors, and businesses alike.
A Divided Committee: 10–2 Vote;
While the decision to hold rates was widely expected, the vote revealed internal disagreement within the central bank.
The Federal Reserve disclosed that Chair Jerome Powell and nine other voting members supported maintaining the current target range, while Stephen I. Miran and Christopher J. Waller dissented, voting instead for a quarter-percentage-point rate cut.
Dissenting votes at a meeting where rates are held steady are notable and indicate differing views among policymakers on whether inflation risks now outweigh concerns about slowing growth and labor-market softening.
Balancing Inflation, Employment, And Uncertainty;
In reiterating its policy stance, the Federal Reserve emphasized its commitment to achieving maximum employment and price stability, with a longer-run inflation target of 2 percent. The Committee acknowledged that uncertainty about the economic outlook remains elevated.
Powell provided additional context during the press conference:
- Labor market: Powell said indicators suggest the labor market “may be stabilizing after a period of gradual softening,” citing a 4.4 percent unemployment rate in December and lower monthly job gains.
- Economic growth: Consumer spending has remained resilient, business investment continues to expand, while housing activity remains weak, he said.
- Inflation: Powell noted that inflation has eased significantly from its 2022 peak but remains above target, with personal consumption expenditures (PCE) inflation at 2.9 percent over the past 12 months and core PCE inflation at 3.0 percent.
Powell also acknowledged external pressures affecting the outlook, including the inflationary impact of tariffs on goods and the economic drag from a temporary federal government shutdown, which he said likely weighed on growth in the prior quarter but should reverse as normal operations resume.
Trump Pressures Fed As Independence Remains Central;
The Fed’s decision comes amid heightened political scrutiny. President Trump has publicly criticized Powell and urged the central bank to accelerate rate cuts, arguing that inflation has cooled sufficiently to justify looser monetary policy.
Despite those calls, the Fed’s decision to hold rates steady underscores its effort to maintain institutional independence and avoid reacting to short-term political pressure, particularly while inflation remains above target and the Committee itself is divided.
Financial markets largely anticipated Wednesday’s outcome, with investors expecting a pause after the Fed’s recent easing cycle, as policymakers assess the sustainability of disinflation.
What Lies Ahead;
For now, the Federal Reserve is signaling caution rather than urgency.
The combination of steady rates, persistent inflation, and internal dissent suggests that the path forward will depend heavily on upcoming economic data, including inflation readings, labor-market reports, and broader measures of financial conditions.
While some policymakers believe the economy already warrants further rate reductions, others appear content to wait for additional confirmation that inflation is on a durable path back to the Fed’s 2 percent target.
For consumers and businesses, the message is clear: the Federal Reserve has paused, but it has not declared victory.
Editor’s Note:
This article was written by Haylee Ficuciello, Economy & Finance Editor, and is based on the Federal Reserve’s official January 28, 2026, FOMC policy statement, Chair Jerome Powell’s prepared remarks and press conference comments, and contemporaneous reporting regarding President Trump’s public calls for lower interest rates. All economic data cited reflect figures available at the time of publication.
