At a meeting on Wednesday, the Federal Reserve elected to leave interest rates unchanged. This follows two moderate interest rate cuts in the last two regular meetings.
The Federal Reserve on Wednesday voted to take a break from a recent run of interest rate cuts, as the central bank navigates questions about its independence and awaits a new leader.
Meeting market expectations, the central bank’s Federal Open Market Committee voted to keep its key interest rate in a range between 3.5%-3.75%. The decision put a halt to three consecutive quarter percentage point reductions, billed as maintenance moves to guard against potential downturns in the labor market.
It’s unclear what the notion of potential downturns in the labor market may be based on. But the Fed has expressed worries about resurging inflation.
In voting to hold the line, the committee also upped its assessment of economic growth. It also eased its concerns about the labor market as compared to inflation.
“Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization,” the post-meeting statement said. “Inflation remains somewhat elevated.”
Interest rates, as tracked from 2000 to date, remains likewise somewhat elevated.
— Ward Clark (@TheGreatLander) January 28, 2026
Last October, I reported on the last rate cut. At that time, we noted that the sudden absence of a couple of million illegal aliens may be opening up jobs for American workers.
Read More: New: Fed Makes Second 0.25 Federal Funds Rate Drop of Year
The employment citation is an interesting one. There’s a wild card in the American employment picture right now, and that is the fact that over 2 million illegal aliens have left the country, either involuntarily or through voluntary self-repatriation. While there’s little good data (at least, yet) as to how many jobs have been vacated and how that will affect the jobs market for citizens, out of 2 million people suddenly gone, there are bound to be some effects.
And in December, we noted that the Fed had predicted only one possible rate cut in 2026. Could they have made that one cut, so soon? Or will that prediction change as the job market picks up and inflation remains low?
Read More: New: Fed Cuts Rates Amid Dissent, Eyes Just One Cut in 2026
Wednesday’s report announcing the decision also said:
“In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks,” the statement said, repeating language inserted in December that markets saw as a shift away from the easing cycle that began in September 2025
That’s a fair amount of anticipatory CYA right there. And that’s not surprising; the Fed has, in these decisions, always been one to hedge its bets. Making predictions about the economy is a risky business; sometimes it seems they may as well consult a crystal ball as any number of Ivy League economists.
President Trump has not yet responded to the decision; he has, as we have covered repeatedly, been pushing the Fed for steeper interest rate cuts.
The markets seem to be taking the announcement in stride. As of this writing, the Dow Jones is down 23 points, while the NASDAQ is up 38 points.
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