FX.co ★ Fed Policymakers Split Over Next Moves on Rates

Federal Reserve officials are split on the future path of interest rates, highlighting the tension between containing inflation and supporting the labor market, according to the minutes of the January 2026 FOMC meeting. Several participants indicated that further reductions in the federal funds rate would likely be appropriate if inflation continues to ease in line with their forecasts. Others argued it may be prudent to keep the policy rate unchanged for an extended period, and some even raised the possibility that rate increases could become necessary if inflation remains persistently above the 2% target. In addition, a large majority of participants judged that downside risks to employment had diminished in recent months, while the risk of more persistent inflation remained elevated. At its January 2026 meeting, the Fed left the federal funds rate unchanged at a target range of 3.50%–3.75%, as widely expected, following three consecutive rate cuts in the previous year.