US Economy on 'Firm Footing' Entering 2026, Fed Chair Powell Says

03:16 PM EST, 01/28/2026 (MT Newswires) -- The U.S. economy is entering 2026 on solid footing, supported by data that are increasingly shaking off the effects of the federal government shutdown, Federal Reserve Chair Jerome Powell said Wednesday at a press conference.

"The US economy expanded at a solid pace last year, and is coming into 2026 on a firm footing," Powell said, noting signs of stabilization and that the shutdown's impact on incoming data is becoming less material.

At its meeting, the Federal Open Market Committee kept the federal funds rate at 3.5% to 3.75% and made changes to its statement pointing to firmer economic growth, stable unemployment and reduced concern about inflation. The statement also acknowledged that job gains have remained low.

"There was broad support on the committee for holding today -- broad, I would say, including among non-voters," Powell said. "Of course, some people did want to cut, and dissented, but the committee agreed pretty broadly for holding today."

Looking ahead, Powell said that there could be a case for further lowering the fed funds rate if inflation slows as expected.

"The expectation is that we will see the effects of tariffs flowing through goods prices peaking, then starting to come down, assuming there are no new major tariff increases that are begun," Powell said. "If we see that, that would be something that tells us that we can loosen policy. Also, if we see something that suggests that the labor market is not stabilizing, and, in fact, the downside risks reemerge, or the data just gets worse, we would have to look at both of those. We have a two-sided mandate."

Powell declined to comment on ongoing legal cases involving himself or Fed Governor Lisa Cook and would not discuss whether he plans to stay on the FOMC as a governor after his term as chair ends in May.

He confirmed he attended the Supreme Court hearing on the case involving Cook, saying it was appropriate for him to do so.

Powell was also asked about the recent declines in the dollar but cited Fed precedent in declining to comment, saying that responsibility lies with the Treasury Department.

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