The Federal Reserve held interest rates steady Wednesday, pausing after a series of cuts to end last year.<\/p>\n\n\n\n
At the conclusion of the Federal Open Market Meeting, the Fed announced it is maintaining the target rate of 3.5 to 3.75 percent. The pause ended a run of three straight interest rate cuts by the Fed, which had dropped rates by 75 basis points since September and 175 basis points since September 2024.<\/p>\n\n\n\n
Federal Reserve Chairman Jerome Powell said the U.S. economy has started 2026 on a firm footing, though the expansion of the labor market has slowed and inflation remains above the 2 percent goal.<\/p>\n\n\n\n
\u201cWhile job gains have remained low, the unemployment rate has shown some signs of stabilization, and inflation remains somewhat elevated,\u201d Powell said.<\/p>\n\n\n\n
Unemployment remains at 4.4 percent, and the labor market has seen an average decline of jobs of 22,000 in the past few months, according to Powell.<\/p>\n\n\n\n
\u201cThis reflects a decline in the growth of the labor force due to lower immigration and labor force participation, though labor demand has clearly softened, as well,\u201d Powell said.<\/p>\n\n\n\n
Inflation ended December at 2.9 percent, with core inflation, minus food and energy prices, at 3 percent. Powell hinted that the remaining inflation is attributed to tariffs on goods that are expected to move through the economy by the middle of the year.<\/p>\n\n\n\n
\u201cMost of the overrun in goods prices is from tariffs. That is good news, because if it weren\u2019t from tariffs, it might mean it is from demand, and that is a hard problem to solve,\u201d Powell said. \u201cWe do think tariffs are likely to move through, and be a one-time increase.\u201d<\/p>\n\n\n\n