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Federal Reserve keeps interest rates unchanged even as Trump continues to press for lower rates
According to government data, inflation remains elevated in December, with prices up 0.1% last month and 2.7% since last year. Prices have been steadily increasing about 3% annually for more than two years now, and people are feeling the sustained price growth in everyday items like food, clothing, and rent, but utilities and used cars are also high. Much of last year, the Federal Reserve kept. Interest rates high to drive down inflation, but concerning instability in the job market led them to lower rates, and this makes it easier for employers to borrow money and hire people, but it can also prompt faster inflation. Now inflation is one of the main factors that people point to when talking about affordability, *** topic we will hear *** lot about heading into the midterm elections this fall. In Washington, I’m Rachel Hirsheimer.
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Federal Reserve keeps interest rates unchanged even as Trump continues to press for lower rates
Updated: 11:11 AM PST Jan 28, 2026
The Federal Reserve pushed the pause button on its interest rate cuts Wednesday, leaving its key rate unchanged at about 3.6% after lowering it three times last year.The central bank said in a statement that there are signs the job market has stabilized, while it also said growth was “solid,” an upgrade from last month’s characterization as “modest.”With the economy growing at a healthy pace and no signs of deterioration in hiring, Fed officials likely see little reason to rush any further rate cuts. While most policymakers do expect to reduce borrowing costs further this year, many want to see evidence that stubbornly-elevated inflation is moving closer to the central bank’s target of 2%. According to the Fed’s preferred measure, inflation was 2.8% in November, slightly higher than a year ago.Two officials dissented from the decision, with Governors Stephen Miran and Christopher Waller preferring another quarter-point reduction. President Donald Trump appointed Miran in September, while Waller is under consideration by the White House to replace Chair Jerome Powell, whose term ends in May.The Fed’s decision to stand pat will likely fuel further criticism from Trump, who has assailed Powell for months for not sharply cutting short-term rates. When the Fed reduces its key rate, it tends to lower borrowing costs for things like mortgages, car loans, and business borrowing, though those rates are also influenced by market forces.This is a developing story. Check back for updates.
The Federal Reserve pushed the pause button on its interest rate cuts Wednesday, leaving its key rate unchanged at about 3.6% after lowering it three times last year.
The central bank said in a statement that there are signs the job market has stabilized, while it also said growth was “solid,” an upgrade from last month’s characterization as “modest.”
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With the economy growing at a healthy pace and no signs of deterioration in hiring, Fed officials likely see little reason to rush any further rate cuts. While most policymakers do expect to reduce borrowing costs further this year, many want to see evidence that stubbornly-elevated inflation is moving closer to the central bank’s target of 2%. According to the Fed’s preferred measure, inflation was 2.8% in November, slightly higher than a year ago.
Two officials dissented from the decision, with Governors Stephen Miran and Christopher Waller preferring another quarter-point reduction. President Donald Trump appointed Miran in September, while Waller is under consideration by the White House to replace Chair Jerome Powell, whose term ends in May.
The Fed’s decision to stand pat will likely fuel further criticism from Trump, who has assailed Powell for months for not sharply cutting short-term rates. When the Fed reduces its key rate, it tends to lower borrowing costs for things like mortgages, car loans, and business borrowing, though those rates are also influenced by market forces.
This is a developing story. Check back for updates.
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