Economic Data and Growth

As anticipated, the Federal Open Market Committee maintained its interest rate target range at 3.50%–3.75% at its January meeting. In a change to its previous statement, the FOMC noted that economic activity has been expanding at a solid pace, while the unemployment rate has shown signs of stabilization, no longer necessitating a rate cut. On the other hand, two FOMC members—Stephen Miran and Christopher Waller—dissented, preferring to lower the target range by 25 basis points. In addition, at its annual organization meeting, the FOMC reaffirmed its “Statement on Longer-Run Goals and Monetary Policy Strategy,” which articulates its approach to monetary policy. The statement is identical to the version adopted in August 2025.

In the press conference following the meeting, Federal Reserve Chairman Jerome Powell noted that the economy goes into 2026 on a firm footing, with job gains staying low while inflation remains elevated. Chairman Powell noted that the FOMC is well positioned to determine the extent and timing of additional adjustments to its policy stance. In addition, the improved outlook for economic activity should have a positive impact on labor demand and employment.

The FOMC’s summary of economic projections, which maps out the Federal Reserve’s expectations for where interest rates may be headed in the future, generally is released in conjunction with every other FOMC meeting. Since the December meeting included a release of economic projections, there was not a release in conjunction with the January FOMC meeting. The December summary signaled a mixed stance regarding where monetary policy should go in 2026. Twelve Federal Reserve officials projected additional rate cuts across 2026, while four anticipated no additional rate cuts, and three predicted a 25-basis-point hike.