Powell's press conference statement indicates a "cautiously hawkish" stance: the economy is stable, inflation is slightly high, and there is no rush to cut interest rates at the moment.

The Federal Reserve’s first FOMC meeting in 2026 chose to hold steady, with Fed Chair Jerome Powell sending a clear signal: until inflation fully returns to target, monetary policy will remain patient and cautious.
(Background recap: The US Federal Reserve keeps interest rates unchanged! Bitcoin drops below $90,000, gold hits a new high of $5,300)
(Additional context: The Fed rate decision tonight: a pause on rate cuts has become consensus, but is Powell sticking to a dovish script?)

Table of Contents

• Rate pause, ending the continuous easing cycle
• Steady economy, slowing inflation but still above target
• Tariffs and policy path, emphasizing data dependence and central bank independence
• Cautious hawkish stance takes shape

On January 28, the Federal Reserve concluded its first FOMC meeting of 2026, deciding to keep the federal funds rate target range unchanged at 3.5% to 3.75%, officially pressing the “pause” button on the ongoing rate cut cycle. Fed Chair Jerome Powell emphasized in the post-meeting press conference that the US economy remains solid, but inflation has not yet fully returned to the target level, and there is no urgent need for further rate cuts at this stage.

Rate pause, ending the continuous easing cycle

This decision marks the first pause in rate cuts since July 2025. In previous meetings, the Fed had repeatedly lowered rates by 25 basis points each time to respond to cooling inflation and economic slowdown risks.

The meeting results show that most FOMC members believe the current rate level is “appropriate,” sufficient to curb inflation while maintaining economic growth momentum. However, two members — Chris Waller and Stephen Miran — advocated for an immediate 25 basis point rate cut, indicating internal disagreement over the policy pace.

Steady economy, slowing inflation but still above target

Powell stated at the outset that the US economy “enters 2026 on a solid footing,” with overall economic activity continuing to expand at a steady pace. Employment growth remains modest, but signs of stabilization in the unemployment rate suggest the labor market has not deteriorated significantly.

Regarding inflation, Powell admitted that inflation is “still somewhat elevated,” and has not yet fully returned to the Fed’s 2% long-term target. However, he also pointed out that service sector inflation is showing signs of slowdown across multiple areas, indicating that disinflation trends are ongoing. The Fed will continue to monitor risks to inflation and employment and maintain policy flexibility.

Tariffs and policy path, emphasizing data dependence and central bank independence

In response to external concerns about tariffs, Powell said that tariffs are more likely to cause one-time price increases rather than sustained inflation driven by demand overheating. He expects the impact of tariffs on goods prices to peak this year and then gradually decline, which will help the Fed assess whether there is room to ease policy.

Regarding future rate cuts, Powell was clear that the Fed will not set specific “tests” or thresholds in advance; all decisions will be based entirely on subsequent economic data, adopting a “patient approach.” He also noted that the risks of rising inflation and falling unemployment have diminished to some extent, supporting a “higher for longer” interest rate policy.

In the face of political pressure and related controversies, Powell repeatedly stated he would not comment, reaffirming the Fed’s commitment to maintaining central bank independence and not being swayed by external factors.

Cautious hawkish stance takes shape

Overall, Powell’s remarks demonstrate a “cautious hawkish” stance: on one hand, acknowledging economic performance and inflation improvement, and on the other, clearly signaling no rush to cut rates and basing policy on data. Compared to the previous period of consecutive rate cuts, this meeting’s tone has shifted toward a wait-and-see approach.

Some analysts expect that if inflation continues to decline, the Fed may implement a 25 basis point rate cut within 2026, with the earliest possibly in June, but the overall policy path remains uncertain.