The US Federal Reserve on Wednesday kept interest rates unchanged as the central bank works to preserve its ability to set policy without political interference. Officials held the benchmark lending rate at 3.5%–3.75%, following three consecutive rate cuts late last year.
The rate decision was not unanimous. Board of Governors members Stephen Miran and Christopher Waller preferred lowering interest rates, while the majority supported keeping them unchanged.
The Fed’s latest decision comes at a critical moment in the institution’s 112-year history, as the US Supreme Court reviews a case that could have major consequences for the central bank’s independence.
Fed says economy is growing
In its policy statement, the Fed said economic activity has been “expanding at a solid pace”, while inflation remains “somewhat elevated.” The Federal Open Market Committee reaffirmed its commitment to achieving maximum employment and bringing inflation back to its 2% target.
It warned that uncertainty around the economic outlook remains elevated and said it will closely watch incoming data and risks when deciding its next policy steps.
Fed outlines steps to implement January policy decision
Following its January 28, 2026 decision, the Federal Reserve announced several actions to implement its monetary policy stance.
The Board of Governors voted unanimously to keep the interest rate paid on reserve balances at 3.65%, effective January 29, 2026.The Federal Open Market Committee instructed the New York Fed’s trading desk to continue managing markets to keep the federal funds rate within the 3.5%–3.75% range.
The Fed will continue overnight repurchase operations at 3.75% and overnight reverse repurchase operations at 3.5%, with a daily limit of $160 billion per counterparty. To maintain sufficient liquidity in the banking system, the Fed will buy Treasury bills and, if needed, other short-term Treasury securities with maturities of up to three years.The Fed will also roll over all principal payments from its Treasury holdings and reinvest proceeds from agency securities into Treasury bills.
Trump expected to name next Fed chair soon
President Donald Trump is expected to announce his choice to replace Jerome Powell when Powell’s term ends. Trump has repeatedly criticised Powell for not cutting interest rates quickly enough. Whoever succeeds Powell is expected to face immediate credibility concerns, as Trump’s pressure on the Fed has raised questions about the independence of the next chair.