Fed Keeps Interest Rates Unchanged Amid 'Stabilization' in Unemployment Rate

02:43 PM EST, 01/28/2026 (MT Newswires) -- The Federal Reserve left its benchmark lending rate unchanged Wednesday, saying there have been "some signs of stabilization" in the unemployment rate.

The central bank's Federal Open Market Committee held interest rates steady in a range of 3.50% to 3.75%, in line with Wall Street's expectations. Last year, the FOMC delivered three back-to-back 25-basis-point cuts amid concerns about the labor market.

Fed Governors Christopher Waller and Stephen Miran dissented from the majority at the latest meeting, with both preferring to reduce rates by a quarter percentage point, the FOMC said Wednesday following its two-day meeting.

"Job gains have remained low, and the unemployment rate has shown some signs of stabilization," the committee said. In December, the FOMC said that downside risks to employment had risen in recent months, but it dropped that reference from the Wednesday statement.

Earlier this month, official data showed that US nonfarm payrolls rose less than expected in December, while estimates for the prior two months were downgraded. The unemployment rate decreased to 4.4% last month from a downwardly revised 4.5% in November.

"Available indicators suggest that economic activity has been expanding at a solid pace," the FOMC said Wednesday. The committee reiterated that inflation in the US continues to be "somewhat elevated."

US President Donald Trump recently called on Fed Chair Jerome Powell to cut rates "meaningfully" after data showed that consumer price growth held steady year over year last month.

Powell, whose term as Fed chair is set to expire in May, faces a criminal probe linked to his testimony regarding office building renovation. Powell previously suggested the investigation reflected continued efforts by the Trump administration to influence monetary policy.

Oxford Economics is betting on "a couple of further rate cuts" later this year, citing a gradual fall back in inflation.

"We do not think a new Fed chair would have any significant impact on the policy outlook in the near-term, particularly given the deep divide on the committee about where rates are likely to end this year," Oxford Chief US Economist Michael Pearce said in remarks e-mailed to MT Newswires.

The FOMC's next meeting is scheduled for March 17-18.

"In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the committee will carefully assess incoming data, the evolving outlook, and the balance of risks," the FOMC said Wednesday, reiterating its previous message. "The committee is strongly committed to supporting maximum employment and returning inflation to its 2% objective."

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