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Fed's Open Market Committee Keeps Rate at 3.50%–3.75%, Says Future Moves Will Be Data-Dependent
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Summary
The Federal Open Market Committee left the federal funds target range at 3.50%–3.75%, citing solid economic growth, signs of a stabilizing labor market and inflation that has eased but remains above the 2% goal. Officials said further adjustments will depend on incoming data and risk assessments.
Unidentified Speaker (role/title: Not specified) announced that the Federal Open Market Committee decided to leave the target range for the federal funds rate unchanged at 3.50% to 3.75%. "In support of our goals, today, the Federal Open Market Committee decided to leave our policy rate unchanged," the speaker said.
The decision comes as the U.S. economy "expanded at a solid pace last year and is coming into 2026 on a firm footing," the speaker said, while noting that job gains have slowed and inflation remains above the committee's 2% longer-run objective. The statement cited a 4.4% unemployment rate in December and recent payroll data showing total nonfarm payrolls declined by about 22,000 per month over the past three months, while private payrolls (excluding government) increased about 29,000 per month.
The committee pointed to measures of inflation based on the Personal Consumption Expenditures price index showing total PCE rose 2.9% over the 12 months ending in December and core PCE (excluding food and energy) rose 3.0%. "These elevated readings largely reflect inflation in the goods sector, which has been boosted by the effects of tariffs," the speaker said, while adding that disinflation appears to be continuing in services.
Officials emphasized that recent policy easing—75 basis points of reductions over the previous three meetings—has brought the policy rate into a range that many of the committee view as plausible estimates of neutral. The speaker said that this stance should help stabilize the labor market and allow inflation to resume a downward trend "once the effects of tariff increases have passed through."
On forward guidance, the speaker stressed that "monetary policy is not on a preset course, and we will make our decisions on a meeting by meeting basis." The committee said it will determine the extent and timing of any additional adjustments to its policy rate based on incoming data, the evolving outlook and the balance of risks.
The remarks concluded with a reaffirmation of the Fed's dual mandate to promote maximum employment and stable prices and a pledge to continue working with "objectivity, integrity, and a deep commitment to serve the American people."
