Why is the Federal Reserve expected to hold interest rates steady on January 28, 2026?

The Federal Reserve is likely to hold interest rates steady due to still-elevated inflation and a labor market that has weakened but not collapsed.

Are credit conditions currently hindering businesses and consumers in the U.S. as of January 2026?

No, increased demand for bank loans suggests that borrowing costs are not overly constraining businesses from investing or consumers from spending.

What are financial markets expecting from the Fed in the second half of 2026?

Financial markets are pricing in two quarter-point interest-rate cuts in the second half of 2026.

Home / Business and Economy / US Economy: Inflation High, Jobs Strong, Rates Steady

US Economy: Inflation High, Jobs Strong, Rates Steady

28 Jan

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Summary

Fed likely to hold interest rates steady due to inflation and labor.
Credit conditions are easing, not constraining business or consumer spending.
Financial markets anticipate rate cuts in the latter half of the year.

US Economy: Inflation High, Jobs Strong, Rates Steady

As of January 28, 2026, the Federal Reserve is widely anticipated to keep U.S. policy rates unchanged following its two-day meeting. This decision is primarily driven by persistent elevated inflation and a labor market that has softened but not collapsed.

Easier credit conditions may also reinforce the case against immediate rate cuts. Surveys and bank earnings reports indicate increased demand for loans, suggesting that borrowing costs are not significantly hindering business investment or consumer spending. Analysts expect this trend to continue.

While the Fed's official survey on banking conditions is forthcoming, preliminary data from early surveys showed rising loan demand, particularly from businesses and for housing, even as banks tightened lending terms. This suggests a robust appetite for credit.