Fed Pauses Rate Cuts as Economy Shows Resilience, Inflation Lingers
The Fed held rates steady at 3.5%–3.75% after three consecutive cuts since September. The FOMC noted the economy is 'expanding at a solid pace.' Unemployment held at 4.4% in December 2025.
The Federal Reserve held its benchmark rate steady at 3.5%–3.75% following three consecutive cuts since September 2025. The FOMC statement noted the economy is 'expanding at a solid pace' — language that signals the committee sees no urgency to ease further.
Q3 2025 GDP expanded. Unemployment held at 4.4% in December. Governor Miran and Waller dissented, preferring further cuts — the first visible split within the committee since the easing cycle began.
Goldman Sachs is projecting 2.5% GDP growth for 2026. The S&P 500 closed near 6,978 on the announcement day, reflecting a market that had largely priced the pause.
For bond allocators, the pause extends the window for attractive entry into intermediate duration. For equity investors, the 'soft landing confirmed' read supports continued exposure to cyclicals, though the Warsh nomination (reported separately) has since complicated the forward rate path significantly.
