Key takeaways from the FOMC Minutes for the January 27-28, 2026 meeting:

• The FOMC maintained the federal funds target range at 3.50% to 3.75%, citing solid growth but still-elevated inflation.
• Real GDP expanded in 2025 at a slightly slower pace than 2024, while consumer spending remained resilient and business investment robust, indicating continued economic expansion.
• The unemployment rate held at 4.4% in December and job gains remained low, suggesting labor market stabilization after gradual cooling.
• Inflation stayed above target: PCE +2.8% YoY in November (prior year +2.6%), core PCE +2.8% YoY (prior year 3.0%), while CPI +2.7% YoY and core CPI +2.6% YoY in December, showing easing but still elevated price pressures.
• Participants noted core goods inflation was boosted by tariffs while core services inflation, particularly housing services, continued to decelerate, highlighting differing inflation drivers.
• Financial conditions were supportive: equity prices rose modestly, credit spreads remained low, and borrowing costs declined somewhat but stayed above post-GFC averages.
• Policy expectations were largely unchanged, with markets anticipating 1 to 2 rate cuts this year and the Committee emphasizing decisions would depend on incoming data and risk balance.
• The Committee voted to hold rates, with two members preferring a -25 bp cut, reflecting ongoing debate between inflation persistence risks and labor-market downside risks.
• The Fed also continued balance sheet operations, directing Treasury bill purchases and repo facilities to maintain ample reserves and stable money market functioning.