2026-01-28 19:00:00
- Vote was 10-2 with Waller and Miran voting for cuts
- Prior Fed funds target range was 3.50-3.75%
- Statement saw growth at a ‘solid pace’ vs ‘moderate pace’ previously
- Statement sees inflation as ‘somewhat elevated’, same as before
- Says unemployment rate has shown some signs of stabilization vs ‘edged up’ previously
Looking back to 2025, December’s meeting was contentious – three dissents marked a rare two-sided split. Fed Governor Miran wanted a 50bp cut while Presidents Schmid and Goolsbee argued for no move at all, reflecting deep disagreement about whether policy is sufficiently restrictive.
This meeting sees the change in voting ranks with Goolsbee, Collins, Schmid and Musalem out and replaced by Logan, Kashkari, Hammack and Paulson. Logan was seen as the most-likely to make a hawkish dissent but she didn’t, instead it was Waller and Miran (no surprise) calling for a cut. Notably, Miran called for 25 bps this time vs 50 bps last time. Waller is undoubtedly making a last-ditch effort for the Fed chair job, which could be announced any time.
The December statement’s language about inflation making progress toward the 2% target was also removed, signaling the Fed’s growing unease about stalled disinflation.
Recent data shows core PCE running at 2.8%, well above target and higher than 2.7% expected. The labor market has proven resilient with unemployment hovering near 4% however this week’s consumer confidence report hit an 11-year low.
Trump’s return to the White House has complicated the picture. The president has backed tariffs and demanded immediate rate cuts, creating political pressure Powell will need to navigate carefully. Trump’s DOJ also subpeonaed Powell and that led to a rare Sunday statement from the Fed chair.
Markets had priced in virtually zero chance of a cut today, with June now the earliest anticipated move.
Powell warned that reducing restraint too fast could hinder inflation progress, cementing the higher-for-longer narrative that’s dominated positioning in recent weeks.
