Federal Reserve Holds Rates at 3.5%-3.75% after January 2026 FOMC Pause; Powell Signals Meeting-by-Meeting Approach
The Federal Reserve on Jan. 28, 2026 kept the federal funds rate at 3.5%–3.75%, pausing after three late‑2025 cuts as officials cited a softer labor market and inflation remaining above the 2% target, while Chair Powell pledged a meeting‑by‑meeting approach.
Key takeaways
- Decision: Fed holds rates at 3.5%–3.75% after the January 2026 FOMC meeting — Press release.
- Vote: FOMC split 10‑2; Governors Stephen Miran and Christopher Waller dissented in favor of a 25 basis point cut — Fox Business.
- Rationale: Policymakers cited a slowing labor market and core inflation near 2.6%, still above the Fed’s 2% goal — CoStar reporting, Trading Economics.
- Chair Powell: Described the stance as appropriate and said the Fed will act meeting‑by‑meeting — Fed statement.
Why the Fed paused after cuts
The Fed had implemented three 25‑basis‑point cuts in September, October and December 2025 to support growth as inflation cooled. However, data into January showed slower job gains and underlying consumer prices running near 2.6% through December 2025, prompting policymakers to wait for clearer evidence before easing further.
FOMC participants pointed to a mix of softer hiring — with unemployment stabilizing after a November 2025 rise to 4.5% — and stickier core inflation. That combination reduced the urgency to cut again immediately and increased the value of patience in monetary policy.
For more context see Fox Business reporting and CoStar.
Voting split and what it shows
The 10‑2 vote highlights division among officials. Governors Stephen Miran and Christopher Waller favored a 25‑basis‑point cut, signaling concern about cooling labor conditions and a desire to support growth. The majority judged that inflation risks still warranted patience and cited the official statement noting solid economic expansion but elevated inflation.
“The vote reflects a balancing act: support growth while ensuring inflation moves sustainably toward 2%.”
See the vote coverage at Fox Business and detailed context in CoStar.
Jerome Powell statement and the Fed’s stance
Chair Jerome Powell said the current stance is appropriate to balance maximum employment and price stability, adding that rates are near neutral and the Fed will act meeting‑by‑meeting. That language was intended to preserve flexibility as officials weigh evolving labor market signals against inflation readings.
Powell’s remarks and the official statement are available in the Fed press release. Reporting on Powell’s comments and the surrounding political context is covered by CoStar and LiveNOWFox.
Economic outlook and markets
Markets quickly priced in the Fed’s pause, raising odds the central bank will also hold at the March 17–18 meeting. Economists vary: some forecast one or two cuts later in 2026, possibly in June or beyond, but many officials emphasized waiting for clear evidence that inflation is sustainably returning to 2%.
Risk balance: a softer labor market reduces overheating risk but increases the chance of slower growth; persistent inflation argues against rapid easing. That tension underpinned the decision to pause after the late‑2025 cuts.
Market and reporting links: Fox Business, CoStar.
Practical effects for consumers and businesses
When the Fed cuts, borrowing costs for mortgages, auto loans and credit cards typically decline over time, but the Fed influences rather than directly sets those rates. With rates now held steady, consumers should not expect immediate drops in borrowing costs; mortgage rates will continue to track longer‑term bond yields, lender competition and market moves.
Short term: little immediate relief for borrowers. Medium term: possible cuts later in 2026 could ease loan rates, but timing is uncertain.
See reporting at LiveNOWFox and CoStar.
Political crosscurrents around Fed decisions
Powell’s role has become politically charged. President Trump publicly criticized Powell’s pace of cuts and the Fed faces legal and oversight scrutiny, including DOJ subpoenas tied to a headquarters renovation — developments Powell has dismissed as political pressure. These dynamics intensify debate over Fed independence as Powell’s term ends in May 2026.
Coverage: Fox Business, LiveNOWFox.
Implications for Utah
Economic impact
Utah’s economy is sensitive to borrowing costs. Steady Fed policy means mortgage rates are unlikely to fall quickly, which can slow home buying and commercial real estate investment. Tight housing supply and elevated financing costs may further strain affordability for first‑time buyers in the Salt Lake City area and fast‑growing suburbs.
Labor market and jobs
A cooling national labor market can translate into slower job creation and wage growth in Utah. Although Utah’s unemployment has typically trailed the national average, local employers may pause hiring if consumer demand softens, affecting high‑growth industries along the Wasatch Front.
Inflation and household budgets
With inflation above the Fed’s 2% target, everyday costs — groceries, fuel, rents — may not cool quickly. Utah families may feel budget pressure despite larger projected 2026 tax refunds for many households.
Housing and mortgages
Mortgage rates respond to bond yields and lender behavior; a Fed pause slows the path to lower mortgage rates. Home buyers and builders in Utah may delay purchases or projects until rate paths become clearer, potentially softening construction activity and slowing price growth in overheated neighborhoods.
Political and institutional considerations in Utah
Utah political leaders, who generally emphasize fiscal restraint, will watch whether federal political pressure affects Fed independence. Any sign that politics sways policy could raise concern among local officials and investors focused on a stable business climate.
Practical steps for Utah residents and businesses
- Consider locking mortgage rates if planning to buy and concerned rates may rise.
- Small businesses should reassess investment timetables and consider securing financing sooner rather than later.
- Community leaders can pursue policies that boost workforce participation and housing supply to offset national headwinds.
