FED Monetary Policy

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Fed officials divided on where interest rates should go with several policymakers suggesting the fed may need to raise interest rates if inflation stays above their target, minutes show

• Fed minutes indicate participants were divided on where the policy should head.

  “Some participants commented that it would likely be appropriate to hold the policy rate steady for some time as the Committee carefully assesses incoming data, and a number of these participants judged that additional policy easing may not be warranted until there was clear indication that the progress of disinflation was firmly back on track.”

• Several participants wanted the post-meeting statement to reflect a two-sided description of future monetary policy path.

  “Several participants indicated that they would have supported a two-sided description of the Committee’s future interest rate decisions, reflecting the possibility that upward adjustments to the target range for the federal funds rate could be appropriate if inflation remains at above-target levels.”

fomcminutes20260128.pdf

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Fed keeps interest rate unchanged in the range of 3.5%-3.75% as was widely expected by the market but maintained projections for one rate cut this year

• The post statement said “has been little changed in recent months” replacing the January statement which said unemployment rate “has shown some signs of stabilization”.

• The statement reiterated that the economic activity has been expanding at a solid pace but pointed out that the impact of Iran conflict on the U.S. economy is uncertain.

• Polycymakers raised their outlook for growth in 2026 to 2.4%, from the 2.3% they forecast in December, left unemployment rate forecast for 2026 at 4.4% and raised their outlook for 2026 inflation to 2.7% from 2.4%.

• Stephen I. Miran was the only dissent, prefering a rate cut of 25 basis points.

  

Fed Meeting Post-statement

March Fed Projections