US Fed Meeting Highlights: Jerome Powell Says Rates Now Within Neutral Range Amid Stable Job Market

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

Powell added that business investment continued to expand, contributing to the overall strength of the economy. He also indicated that the labour market may be finding a more stable balance following a period of gradual cooling.

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. Inflation remains somewhat elevated.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate.

In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 3‑1/2 to 3‑3/4 percent. 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 Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. 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. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

• Gold up 2.2% at $5292
• Silver up 0.8% at $113
• Brent up 1% at $68.25

All three US stock benchmarks are trading higher.

• S&P 500 up 0.1%
• Nasdaq 100 up 0.5%
• Dow Jones up 0.1%
• Dollar index up 0.5% at 96.67
• 10-Year bond yield up 2 bps at 4.27%

In a post-meeting statement, the FOMC said “job gains have remained low, and the unemployment rate has shown some signs of stabilization.”

Fed officials also dropped language pointing to increased downside risks to employment that had appeared in the three previous statements. The upgraded assessment of the labor market is likely to hold expectations for a near-term rate cut at bay, despite escalating pressure from the Trump administration.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lisa D. Cook; Beth M. Hammack; Philip N. Jefferson; Neel Kashkari; Lorie K. Logan; and Anna Paulson.

Voting against this action were Stephen I. Miran and Christopher J. Waller, who preferred to lower the target range for the federal funds rate by 1/4 percentage point at this meeting.

The Federal Reserve left the interest rate unchanged at the 3.5%–3.75% target range at the FOMC meeting, pausing its easing cycle after three consecutive rate cuts last year that pushed borrowing costs to their lowest level since 2022.

The Federal Reserve is widely expected to leave the federal funds rate unchanged at the 3.5%–3.75% target range in its January 2026 meeting, pausing its easing cycle after three consecutive rate cuts last year that pushed borrowing costs to their lowest level since 2022.

Chair Jerome Powell’s first press conference since the Fed received grand jury subpoenas is likely to feature questions about political pressure and central bank independence.

The FOMC will announce its decision in 30 minutes. All three US stock benchmarks are trading higher.

• S&P 500 up 0.1%
• Nasdaq 100 up 0.5%
• Dow Jones up 0.1%
• Dollar index up 0.35%
• 10-Year bond yield flat at 4.26%

Fed officials are not releasing new economic projections or the rate dot-plot today, so investors will be parsing Jerome Powell's words for hints on how long policymakers expect to hold rates steady. The median projection issued in December showed officials anticipated just one quarter-point rate reduction this year.

A rate hold this month will still face some opposition. Fed Governor Stephen Miran, who dissented at the last three meetings in favor of deeper reductions, may repeat that sentiment again this week. Michelle Bowman may also dissent after arguing earlier this month the Fed should remain ready to lower rates.

Source: Bloomberg

Fed officials have lowered their benchmark rate by 1.75 percentage points since September 2024, bringing it into a range of 3.5% to 3.75%. Several policymakers have said that leaves them well positioned to balance the risks to employment and inflation. Fed watchers are anticipating few changes to the central bank's post-meeting statement.

The greenback rose 0.5% as US Treasury Secretary Scott Bessent said the US hasn’t intervened to strengthen the yen, and touted the long-standing “strong-dollar policy.” 

A decision to hold rates steady this month is likely to garner broad support from policymakers following a series of contentious cuts. While the majority of officials agreed in those instances to backstop a weakening labor market, another group of policymakers pushed for the focus to remain on elevated inflation.

Economic data since the Fed's early December meeting show little change in labour market or inflation trends, providing limited reason to guide on future rate cuts. Even as job growth remained weak, the unemployment rate fell to 4.4% in December. This was mainly driven by strong economic growth and consumer spending. The Personal Consumption Expenditures Price Index, the Fed's preferred measure for its 2% inflation target, rose slightly to 2.8% in November.

Source: Reuters

The FOMC meeting is scheduled for Jan. 27 and 28. The policy statement will be announced at 2 p.m. ET on Jan. 28 (12:30 a.m. IST on Jan. 29) at a press conference by Powell. The press conference, which follows the meeting, will be streamed live on the Federal Reserve's social media platforms, such as X and YouTube. NDTV Profit will also stream the FOMC press conference on its YouTube channel and social media platforms.

The Fed's two-day meeting concludes on Wednesday, with policymakers expected to keep the benchmark interest rate at 3.5-3.75%. No new economic or policy projections are scheduled, but investors generally expect the Fed to pause further rate cuts until June, likely under Powell's successor.

According to a Reuters report, market-based inflation expectations and longer-term US bond yields show no widespread concern about the central bank's future.

Powell will hold his usual post-meeting press conference on Wednesday. However, it is anticipated that the focus will be less on the policy than on events between meetings. These include a Justice Department subpoena and threatened criminal probe, which prompted the central bank chief to issue a response saying it is part of Trump's campaign to pressure him for rate cuts.

The US equity benchmark S&P 500 index hit an all-time high of 7,000 during early trading session on Wednesday, hours before the US Fed announces its monetary policy decision.

Wall Street Snapshot:

• S&P 500 rises 0.3%, Nasdaq 100 rises 0.7% 
• Dow Jones Industrial Average rises 0.1% 
• Bloomberg Dollar Spot Index rises 0.3% 
• Bitcoin rises 1% to $89,867.92 
• WTI Crude Rises 1.1% To $63.07/Barrel 
• Spot Gold rises 1.6% to $5,260.94  
• 10-Year Treasury Yield unchanged at 4.24%

The United States Federal Reserve is expected to keep interest rates unchanged following its two-day key meeting on Wednesday. The ongoing Fed meeting comes amid reports that the central bank is facing unusual political pressure from the Trump administration for rate cuts. Only three US Fed policy meetings remain before Chairman Jerome Powell's eight-year stint as the world's top central banker ends.