US Federal Reserve holds interest rates steady

28th Jan 2026 22:07

(Sharecast News) - The Federal Reserve left interest rates unchanged on Wednesday, holding its benchmark range at 3.5%-3.75% after three cuts late last year, as policymakers waited for clearer evidence on how earlier easing is feeding through to the economy.

Officials have signalled they want more time to assess the impact of those reductions and indicated policy would only be loosened once price pressures begin to ease. "Uncertainty about the economic outlook remains elevated," the Fed said, adding that the committee remained alert to risks on both sides of its mandate.

The decision came as the central bank faces heightened scrutiny over its independence, with the Supreme Court reviewing a case that could have major implications for its authority. Chairman Jerome Powell earlier this month publicly pushed back against pressure from the Trump administration and reiterated a strong defence of Fed independence in his post-meeting presser, describing it as essential to preventing political influence over monetary policy and warning that its erosion would be difficult to reverse.

Governors Stephen Miran and Christopher Waller dissented in favour of a quarter‑point cut. Waller is on Trump's shortlist to replace Powell when his term ends in May, while Miran - a senior economic adviser to the president - has now dissented at four straight meetings.

Powell also defended his decision to attend Supreme Court arguments last week in a case concerning the president's authority to dismiss Fed Governor Lisa Cook, calling it "perhaps the most important legal case in the Fed's 113‑year history."

He noted continued weakness in the housing market despite solid overall economic activity, and said most of the passthrough from higher tariffs to consumer prices should soon be complete, viewing tariffs as a one‑off price shock rather than a source of persistent inflation.

Reporting by Iain Gilbert at Sharecast.com