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FOMC Press Conference, January 28, 2026
Summary
The Federal Open Market Committee (FOMC) remains focused on achieving maximum employment and stable prices. Economic indicators show solid growth, with a stable unemployment rate of 4.4% and inflation slightly above the 2% target. Despite low job gains, the committee believes the current monetary policy stance is appropriate to support economic progress. The effects of tariffs on goods prices are significant, but disinflation in the services sector is a positive sign.
Chair Powell attended a crucial Supreme Court hearing, emphasizing its historical importance for the Federal Reserve. He acknowledged potential distortions in job market data but noted signs of stabilization. The committee's decision to maintain the current policy rate reflects an improved outlook for economic activity and labor demand. Powell avoided engaging in political controversies, focusing instead on economic matters.
The committee has not yet decided on future rate cuts, emphasizing a data-driven approach to monetary policy. Powell indicated that the economic outlook has improved, with incoming data suggesting solid growth. The Fed remains vigilant about inflation and employment risks, balancing its dual mandate.
Risks to inflation and employment have diminished, but uncertainty remains. Tariffs have contributed to price increases, yet ongoing disinflation in services indicates positive trends. The Fed's independence is crucial for effective monetary policy, and Powell advised his successor to maintain this separation from politics.
Perspectives
short
Federal Reserve
- Emphasizes commitment to dual mandate of maximum employment and stable prices
- Maintains current policy rate to support economic progress
- Indicates signs of stabilization in the job market despite low job gains
- Highlights ongoing disinflation in the services sector as a positive trend
- Advises successor to avoid political entanglements to maintain Feds independence
- Acknowledges strong consumer spending despite economic disparities
Critics of Fed Policy
- Questions the effectiveness of current monetary policy in addressing inflation
- Raises concerns about the impact of tariffs on long-term price stability
- Critiques the Feds reliance on historical data for economic modeling
- Challenges the Feds ability to respond proactively to economic shocks
- Expresses skepticism about the Feds transparency regarding economic indicators
- Highlights potential risks of AI on job market stability
Neutral / Shared
- Acknowledges the complexity of the current economic landscape
- Notes the dynamic nature of the trade environment and tariff impacts
- Recognizes the importance of data-driven approaches in monetary policy
Metrics
unemployment
4.4%
unemployment rate in December
A stable unemployment rate indicates potential resilience in the labor market.
the unemployment rate was 4.4% in December
non-farm payrolls
22,000 units
average decline in total non-farm payrolls over the last three months
A decline in payrolls suggests weakening job growth, which could impact economic stability.
Total non-farm payrolls declined at an average pace of 22,000 per month
private payrolls
29,000 units
average rise in private payrolls over the last three months
An increase in private payrolls indicates some sectors are still hiring, which may support economic growth.
private payrolls rose at an average pace of 29,000 per month
PCE prices
2.9%
total PCE price increase over the past year
Elevated PCE prices signal ongoing inflationary pressures that could influence monetary policy.
total PCE prices rose 2.9% over the 12 months ending in December
core PCE prices
3.0%
core PCE price increase excluding food and energy
Core inflation remains a critical measure for assessing underlying price stability.
core PCE prices rose 3.0%
historical_significance
the most important legal case in the Fed's 113-year history years
importance of the Cook case
Highlights the case's potential impact on the Fed's future operations.
the most important legal case in the Fed's 113-year history
growth
solid start for growth
economic growth outlook
Indicates potential for positive economic momentum.
this year starts off on a solid footing for growth
inflation
performed about as expected
inflation performance
Stability in inflation is crucial for economic planning.
Inflation performed about as expected
Key entities
Timeline highlights
00:00–05:00
The U.S. economy is showing solid growth as it approaches 2026, with low job gains and a stable unemployment rate of 4.4%.
- The U.S. economy expanded at a solid pace last year and is entering 2026 on firm footing
- Job gains have remained low, with the unemployment rate stabilizing at 4.4% in December
- Total non-farm payrolls declined by an average of 22,000 per month over the last three months, while private payrolls rose by 29,000 per month
- Inflation has eased from its mid-2022 highs but remains elevated, with total PCE prices rising 2.9% over the past year
- Core PCE prices, excluding food and energy, rose 3.0%, largely due to inflation in the goods sector influenced by tariffs
- The Federal Open Market Committee decided to leave the policy rate unchanged, maintaining a target range of 3.5 to 3.4%
05:00–10:00
Chair Powell attended a significant Supreme Court hearing related to the Fed, emphasizing its historical importance. He noted adjustments in household survey data indicating stabilization in the job market and removed language about rising employment risks.
- Chair Powell attended the Supreme Court hearing on the lease of Cook case, considering it the most important legal case in the Feds history
- Powell refrained from responding to Treasury Secretary Scott Bessons criticism, stating its not appropriate to comment on other officials
- He noted that the household survey data is being adjusted for distortions from the shutdown, indicating signs of stabilization in the job market
- The Fed removed language about rising downside risks to employment, reflecting improved economic activity and labor demand
- Powell declined to comment on whether the Fed has responded to subpoenas, stating he has nothing to share on that topic
- He avoided discussing the recent volatility in the dollar, emphasizing that currency oversight is the Treasury Departments responsibility
10:00–15:00
Chair Powell indicated a clear improvement in the economic outlook, with incoming data suggesting a solid start for the year. The Fed has not yet decided on future rate cuts, emphasizing a data-driven approach.
- Chair Powell noted a clear improvement in the outlook for growth since the last meeting, with incoming data suggesting a solid start for the year
- Inflation has performed as expected, and labor market data indicates signs of stabilization
- The Fed has not made decisions regarding future rate cuts, emphasizing a meeting-by-meeting approach based on incoming data
- Powell mentioned that the current policy rate is at the higher end of neutral, but opinions vary on whether it is significantly restrictive
- The committee broadly supported holding rates steady at the current meeting, with some dissenting opinions
- There is no specific test articulated for when to next cut rates; the Fed is focused on monitoring economic conditions
15:00–20:00
The risks to inflation and employment have both diminished, although uncertainty remains regarding their balance. Tariffs have contributed significantly to goods price increases, but ongoing disinflation in services indicates positive economic trends.
- The upside risks to inflation and downside risks to employment have both diminished, but still exist
- Most of the overshoot in goods prices is attributed to tariffs, which is seen as good news compared to demand-driven inflation
- Tariffs are expected to result in a one-time price increase, with expectations of goods prices peaking and then starting to decline
- There is ongoing disinflation in all categories of services, indicating a healthy development in that sector
- Inflation expectations have retraced to levels consistent with a 2% inflation target, reflecting confidence in economic stability
- The risks to both inflation and employment have lessened, but the balance between them remains uncertain
20:00–25:00
BIS concluded that global investors are hedging dollar exposures due to policy uncertainty, but there is little data to support this view. The Fed's current large deficit is occurring at full employment, indicating a need to address the fiscal picture.
- BIS concluded that global investors are hedging dollar exposures due to policy uncertainty, but there is little data to support this view
- The possibility of raising rates is not the base case for the Fed, but they remain open to it depending on inflation and labor market conditions
- Concerns about the US fiscal trajectory are highlighted, with the federal budget deficit on an unsustainable path despite the level of debt being manageable
- The Feds current large deficit is occurring at full employment, indicating a need to address the fiscal picture
- There is no direct connection between the Feds rate cuts and the movement of longer-term rates, which are influenced by various factors including fiscal policies
- Independence of the Federal Reserve is crucial for effective monetary policy, serving the public interest by separating it from political control
25:00–30:00
Monetary policy in advanced democracies can be influenced by political cycles, which may undermine central bank credibility. Despite signs of a softening labor market, consumer spending remains strong, indicating a complex economic landscape.
- Monetary policy can be politically influenced during election cycles, affecting economies in advanced democracies
- Maintaining the credibility of central banks is crucial; losing public faith in their impartiality could be detrimental
- The labor market has shown signs of softening, with both labor supply and demand decreasing significantly
- Job availability perceptions are low, indicating a potential softening in the labor market despite some positive indicators
- The current economic growth is surprising, driven by strong consumer spending and the impact of fiscal policies
- There is a disconnect between negative consumer sentiment in surveys and actual spending behavior