Fed Set to Pause Rate Cuts

2026-01-28 07:35 By Joana Taborda 1 min. read

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.

Investors will be watching closely for guidance on the timing of the next rate cut, although policymakers may signal an extended pause.

Job growth has slowed sharply, the unemployment rate has stabilized, and inflation remains stubbornly above the Fed’s 2% target.

In its December projections, the Fed signaled just one 25-basis-point rate cut in 2026.

Markets currently expect that cut to come in June, while pricing in a smaller probability of an additional move in December.

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



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