The Federal Reserve decided Wednesday to keep its foot off the pedal, leaving the federal funds rate unchanged at 3.50%-3.75% after slashing rates three times last year. It's the first time the central bank has paused since borrowing costs hit their lowest levels since 2022.

The January 2026 statement from the Federal Open Market Committee carried some notably optimistic tweaks. Economic activity is now expanding at a "solid pace," an upgrade from the "moderate pace" language used previously. The committee also noted the unemployment rate has shown "some signs of stabilization," replacing earlier wording that it had "edged up." Inflation, meanwhile, still "remains somewhat elevated."

All eyes now turn to Fed Chair Jerome Powell's press conference at 2:30 p.m. ET, where he'll likely face questions about more than just monetary policy. Powell is dealing with unprecedented political pressure after the Department of Justice served the Federal Reserve with grand jury subpoenas earlier this month. The subpoenas relate to Powell's testimony before the Senate Banking Committee last June about a multi-year renovation project involving historic Fed office buildings.

Powell didn't mince words about the situation in his January 11 speech. "Those are pretexts," he said bluntly. "The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President."