Fed Expected to Hold Rates

The Fed's decision reflects a balancing act between elevated inflation and a softening, but stable, labor market. Two Fed voting members dissented, preferring a 0.25% rate cut. Chairman Powell emphasized that future decisions will hinge on incoming data, pointing to signs of labor market stabilization and improved economic activity. He also suggested that the effects of tariffs are expected to peak and fade, which could support easier policy. The Fed's December Summary of Economic Projections (SEP) indicated improved growth projections alongside lower inflation expectations for 2026. However, the range of views on the policy rate remains wide, dependent on the progress of growth, inflation, and labor markets. For small businesses in Medway, MA, and elsewhere, unchanged rates mean continued higher borrowing costs, which can impact expansion and hiring. Businesses should evaluate their debt structures to identify refinancing opportunities as rates potentially decline later in 2026.