Federal Reserve — FOMC Statement (USA, 2026)

FOMC Minutes of the Federal Open Market Committee January 27 28, 2026 F E D E R A L R E S E R V E S Y S T E M Minutes of the Federal Open Market Committee January 27 28, 2026 A joint meeting of the Federal Open Market Committee and the Board of Governors of the Federal Reserve System was held in the offices of the Board of Governors on Tuesday, January 27, 2026, at 10:00 a.m. and continued on Wednesday, January 28, 2026, at 9:00 a.m.1 Annual Organizational Matters2 The agenda for this meeting reported that advices of the election of the following members and alternate members of the Federal Open Market Committee for a term beginning January 27, 2026, were received and that these individuals executed their oaths of office. The elected members and alternate members were as follows: John C. Williams, President of the Federal Reserve Bank of New York, with Sushmita Shukla, First Vice President of the Federal Reserve Bank of New York, as alternate; Anna Paulson, President of the Federal Reserve Bank of Philadelphia, with Thomas I. Barkin, President of the Federal Reserve Bank of Richmond, as alternate; Beth M. Hammack, President of the Federal Reserve Bank of Cleveland, with Austan D. Goolsbee, President of the Federal Reserve Bank of Chicago, as alternate; Lorie K. Logan, President of the Federal Reserve Bank of Dallas, with Raphael W. Bostic, President of the Federal Reserve Bank of Atlanta, as alternate; Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, with Mary C. Daly, President of the Federal Reserve Bank of San Francisco, as alternate. 1 The Federal Open Market Committee is referenced as the  FOMC  and the  Committee  in these minutes; the Board of Governors of the Federal Reserve System is referenced as the  Board  in these minutes. 2 Committee organizational documents are available at www.federalreserve.gov/monetarypolicy/rules_authorizations.htm. 2 January 27 28, 2026 By unanimous vote, the following officers of the Committee were selected to serve until the selection of their successors at the first regularly scheduled meeting of the Committee in 2027: Jerome H. Powell Chair John C. Williams Vice Chair Joshua Gallin Secretary Matthew M. Luecke Deputy Secretary Brian J. Bonis Assistant Secretary Michelle A. Smith Assistant Secretary Mark E. Van Der Weide General Counsel Richard Ostrander Deputy General Counsel Reena Sahni Assistant General Counsel Trevor A. Reeve Economist Stacey Tevlin Economist Beth Anne Wilson Economist Stephanie R. Aaronson Shaghil Ahmed Kartik B. Athreya Brian M. Doyle Eric M. Engen Michael T. Kiley Elizabeth Klee Edward S. Knotek II Karel Mertens Donald Keith Sill Andrea Raffo Associate Economists By unanimous vote, the Committee selected the Federal Reserve Bank of New York to execute transactions for the System Open Market Account (SOMA). By unanimous vote, the Committee selected Roberto Perli and Julie Ann Remache to serve at the pleasure of the Committee as manager and deputy manager of the SOMA, respectively, on the understanding that these selections were subject to being satisfactory to the Federal Reserve Bank of New York. Minutes of the Federal Open Market Committee 3 Secretary s note: The Federal Reserve Bank of New York subsequently sent advice that the selections indicated previously were satisfactory. By unanimous vote, the Committee approved the FOMC Authorizations and Continuing Directives for Open Market Operations, with a few minor changes to the Continuing Directive for Domestic Open Market Operations to ensure consistency with the Committee s direction on conducting standing repurchase agreement (repo) operations in the Implementation Note issued following the December 2025 meeting. All participants indicated support for, and agreed to abide by, the FOMC Policy on Investment and Trading for Committee Participants and Federal Reserve System Staff, the Program for Security of FOMC Information, the FOMC Policy on External Communications of Committee Participants, and the FOMC Policy on External Communications of Federal Reserve System Staff. The Committee voted unanimously to reaffirm those four policies. As part of the Committee s annual organizational review process, all participants indicated support for the Statement on Longer-Run Goals and Monetary Policy Strategy, and the Committee voted unanimously to reaffirm it without revision. Developments in Financial Markets and Open Market Operations The manager turned first to an overview of broad market developments during the intermeeting period. Respondents to the Open Market Desk Survey of Market Expectations (Desk survey) continued to see the economy as resilient and again marked up their forecasts for real gross domestic product (GDP) growth in 2026, while their expectations for headline personal consumption expenditures (PCE) inflation and the unemployment rate were little changed. Market- and survey- based policy rate expectations were likewise little changed. Market-based measures of policy rate expectations indicated one to two 25 basis point rate cuts this year, and the median modal path of the federal funds rate, as given in the Desk survey, continued to indicate expectations of two 25 basis point rate cuts this year. The manager turned next to Treasury market developments and market-based measures of inflation compensation. Shorter-term Treasury yields were little changed, while longer-term yields rose a few basis points on net; the Treasury curve steepened slightly as a result. Near-term inflation compensation continued to decline amid lower-than-expected consumer price index (CPI) readings, lower energy prices, and lower-than-anticipated pass-through of tariffs to customers; forward rates suggested that near-term inflation would stabilize close to current levels for the rest of the year. Model-based measures of short-term inflation expectations also declined some over the intermeeting period, with forward rates suggesting further modest declines over the course of this year. The 4 January 27 28, 2026 Treasury market continued to function well amid low volatility. In light of the growing portion of Treasury securities that is financed using repos, the manager noted the importance of the stability of the repo market for the continued smooth functioning of the Treasury market. The recent announcement that Fannie Mae and Freddie Mac may increase their mortgage investment portfolios garnered substantial market attention and was followed by a notable decline in mortgage- backed securities yields relative to those on comparable-maturity Treasury yields. Still, the manager observed that the decline was unlikely to result in a material increase in mortgage refinancing because current mortgage rates are well above the weighted average rate of outstanding mortgages. The manager moved to a discussion of equity prices. The largest technology companies continued to underperform the market, as investors remained focused on their elevated valuations and large capital expenditures. Excluding those companies, the S&P 500 was up nearly 3 percent over the intermeeting period; cyclical sectors and indexes of firms with smaller market capitalizations performed even better. Regarding international developments, private-sector consensus forecasts continued to call for dollar depreciation this year, as many of these forecasters expected a larger reduction in policy rates in the U.S. than in other advanced-economy jurisdictions. The extent of expected depreciation had moderated quite a bit, on net, over the previous several months, however, in light of continued improvement in the expected growth of the U.S. economy relative to the expected growth of other major economies. In the days leading up to the meeting, the dollar had depreciated markedly after reports that the Desk had made requests for indicative quotes, known as  rate checks,  on the dollar  yen exchange rate. The manager noted that the Desk had requested those quotes solely on behalf of the U.S. Treasury in the Federal Reserve Bank of New York s role as the fiscal agent for the U.S. The manager went on to discuss developments in money markets. Over the intermeeting period, the effective federal funds rate remained stable at a level just below the interest rate on reserve balances, and pressures in repo rates generally moderated. While repo rates increased notably at year-end, rate pressure was less than investors had generally anticipated. Money market contacts attributed the better-than-expected outcome to a variety of factors, including an increase in available liquidity due to the start of reserve management purchases (RMPs) and a lower Treasury General Account (TGA), the recent changes to standing repo operations  design and communications, the increased adoption of centrally cleared repo, and the overall preparedness of investors for year-end tightness. The manager noted that the changes to standing repo operations implemented in December might have made market participants more willing to participate in these operations, as suggested by increased utilization relative to the pre-December period when market rates exceeded the rate on standing repo operations. Market contacts mentioned that the removal of the aggregate limit, the Minutes of the Federal Open Market Committee 5 clarifications that these operations are intended for monetary policy implementation purposes, and the statement by the Chair that the operations are expected to be used when  economically sensible  were particularly helpful factors. Finally, the manager discussed the expected trajectory of key components of the Federal Reserve