Following three straight interest rate cuts to close out 2025, the Federal Reserve on Wednesday announced its widely expected decision to leave rates unchanged following its first monetary policy meeting of 2026.
The Fed said it decided to maintain the target range for the federal funds rate at 3.50 to 3.75 percent following three consecutive quarter point rate cuts.
As with other recent decisions, the choice to leave rates unchanged was not unanimous, as Fed Governors Stephen I. Miran and Christopher J. Waller preferred cutting rates by another quarter point.
The Fed said the decision to leave rates unchanged came amid elevated uncertainty about the economic outlook.
The central bank also said it remains attentive to the risks to both sides of its dual mandate of maximum employment and inflation at the rate of 2 percent over the longer run.
In its economic assessment, the Fed said economic activity has been expanding at a “solid pace” after saying activity has been expanding at a “moderate pace” after last month’s meeting.
The Fed also said job gains have remained low but noted the unemployment rate has shown some signs of stabilization.
In assessing the appropriate stance of monetary policy, the Fed said it will continue to monitor the implications of incoming information and stressed it would be prepared to adjust rates if risks emerge that could impede the attainment of its dual goals.
The Fed’s next monetary policy meeting is scheduled for March 17-18, with CME Group’s FedWatch Tool currently indicating an 84.2 chance the Fed will once again leave rates unchanged.
The FedWatch Tool suggests investors currently expect the Fed to keep rates on hold until after Fed Chair Jerome Powell steps down in May.
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