Federal Reserve Holds Rates
Monitoring Stance
January 28, 2026 — The Federal Open Market Committee (FOMC) announced today that it has decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent. In its statement, the Committee noted that while economic activity has been expanding at a solid pace, uncertainty regarding the economic outlook remains elevated.
Economic Outlook and Goals The Federal Reserve reaffirmed its strong commitment to achieving maximum employment and returning inflation to its 2 percent objective over the longer run. Current economic indicators suggest a mixed landscape:
Inflation: Remains “somewhat elevated”.
Labor Market: Job gains have remained low, though the unemployment rate has shown signs of stabilization.
The Committee emphasized that it is attentive to risks on both sides of its dual mandate. When considering future adjustments to the federal funds rate, officials plan to carefully assess incoming data, the evolving outlook, and the balance of risks.
Dissent Within the Committee The decision to hold rates steady was not unanimous. While Chair Jerome H. Powell and the majority of voters supported maintaining the current rate, Stephen I. Miran and Christopher J. Waller voted against the action. Both dissenting members preferred to lower the target range for the federal funds rate by 1/4 percentage point at this meeting.
Implementation and Market Operations To implement this policy stance, the Board of Governors voted unanimously to maintain the interest rate paid on reserve balances at 3.65 percent, effective January 29, 2026. Additionally, the primary credit rate has been established at 3.75 percent.
The FOMC has directed the Open Market Desk to execute specific transactions to maintain the federal funds rate within the target range, including:
Conducting standing overnight repurchase agreement operations at a rate of 3.75 percent.
Conducting standing overnight reverse repurchase agreement operations at an offering rate of 3.5 percent, with a counterparty limit of $160 billion per day.
Increasing holdings of Treasury bills (and other Treasury securities with maturities of 3 years or less, if needed) to maintain an ample level of reserves.
Regarding the balance sheet, the Federal Reserve will roll over all principal payments from Treasury securities at auction and reinvest all principal payments from agency securities into Treasury bills. The Committee stated it would be prepared to adjust the stance of monetary policy as appropriate should risks emerge that could impede the attainment of its goals.
PR Link: https://www.federalreserve.gov/monetarypolicy/files/monetary20260128a1.pdf