fedmeeting

Three Federal Reserve officials appeared lukewarm on Thursday to the idea of an interest rate cut next month, as investors geared up for U.S. central bank chief Jerome Powell’s speech to the annual Jackson Hole conference in Wyoming.
“I walk into every meeting with an open mind,” Cleveland Fed President Beth Hammack said in an interview with Yahoo Finance on the sidelines of the three-day symposium, which is hosted by the Kansas City Fed. “But with the data I have right now and with the information I have, if the meeting was tomorrow, I would not see a case for reducing interest rates,” Hammack said.
Speaking on CNBC, Kansas City Fed President Jeffrey Schmid said, “I think we’re in a really good spot and I think we really have to have very definitive data to be moving that policy right now.”
In a separate public appearance, Atlanta Fed President Raphael Bostic said he still has a rate cut penciled in for this year, but added that any forecast is surrounded by uncertainty and “I’m not stuck on anything.”
The three Fed officials spoke ahead of Powell’s highly anticipated keynote address on Friday, which investors hope will offer firm clues on whether the central bank plans to cut rates at its Sept. 16 to 17 meeting.
Financial markets are betting that the Fed will lower its benchmark interest rate by a quarter of a percentage point at the meeting next month, and it’s possible that Powell will in fact send such a signal.
Unexpectedly weak July hiring data coupled with big downward revisions to hiring in May and June bolstered hopes of a coming reduction in borrowing costs. Futures markets currently put a 70% probability on a quarter-percentage cut next month in the Fed’s policy rate, currently set in the 4.25 to 4.50 per cent range.
Goldman Sachs researchers said they did not expect Powell’s remarks on Friday “to decisively signal a September cut, but the speech should make it clear to markets that he is likely to support one.”
Two-sided risks
The challenge for Fed policymakers is that even as there have been signs of labor market weakening, which on its own would call for lower rates, inflation remains above the central bank’s two per cent target and could well go higher due to the Trump administration’s aggressive hiking of tariffs on imports.
Although the tariffs are widely expected to increase prices, that effect is only starting to be seen in the data. There’s an active debate within the Fed as to whether any jump in inflation will be a one-off hit that can be ignored by policymakers, or the making of something more persistent.
“My biggest concern is that inflation has been too high for the past four years, and right now it’s been trending in the wrong direction,” Hammack said.
She added that firms have been trying to hold off on tariff-related price hikes, but that trend can only go on for so long. Hammack added that the full impact of the tariffs won’t be known until next year.
Some Fed policymakers, including Governor Christopher Waller, have argued that everything the economics profession knows about tariffs suggests the hit will be a one-time adjustment. But Hammack noted in her interview that “theory and practice can be quite different,” underscoring her caution about a rate cut now.
Atlanta Fed economists said in a report released on Thursday that “we find evidence for the potential of tariffs to touch off another bout of high inflation,” in part because even firms that are not exposed to tariff costs are expecting stronger price pressures.
Schmid noted in his interview that with inflation well above the Fed’s target, officials would need to take into account how reducing rates now might influence public expectations. “I think we’ve got to be careful about what lowering short-term rates would do to the inflation mentality,” he said.
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As we move into the final week of January 2026, a unique "convergence" of events is creating high volatility across currencies, equities, and crypto.

Here is what is coming "next week" (and the final days of this week) regarding the Fed, the Yen, and Tariffs:

### 1. The Fed Meeting (January 27–28)

The Federal Open Market Committee (FOMC) meeting is the centerpiece of the week.

* **The Expectation:** A **"Hawkish Pause."** After three consecutive cuts in late 2025, the Fed is expected to hold the interest rate at **3.5%–3.75%** on Wednesday, Jan 28.
* **The Drama:** Chair Jerome Powell is currently under significant political pressure and a DOJ probe regarding internal bank expenditures. Markets are watching to see if he asserts independence or hints at a "neutral rate" of 3% to align with the administration's wishes.
* **Data Gap:** Because of the recent government shutdown, the Fed is flying "blind" with missing PCE inflation data, making Powell’s press conference at **2:30 PM ET on Jan 28** extremely unpredictable.

### 2. The Yen Surge & "Coordinated Intervention"

The Japanese Yen (JPY) has become the hottest story in forex this week.

* **The Move:** USD/JPY plummeted from **159.00 to nearly 153.50** in just 48 hours.
* **What’s Happening:** There is heavy speculation that the **New York Fed and the Bank of Japan** are conducting "coordinated intervention" to support the Yen.
* **Next Week’s Risk:** If the Fed sounds bullish on Wednesday, the Yen could give back these gains. However, Japan’s Prime Minister Takaichi has warned she will take "all necessary measures" to stop speculative moves before the **February 8 Japanese election**.

### 3. The "Greenland Tariffs" (Effective Feb 1)

The trade war has entered a bizarre new chapter centered on the Arctic.

* **The Deadline:** President Trump’s threatened **10% tariff** on eight European nations (including Germany, France, and the UK) is set to trigger on **February 1** (this Sunday).
* **The Cause:** The administration is using these tariffs as leverage to pressure a deal for the U.S. to "purchase" Greenland from Denmark.
* **Market Impact:** European leaders have threatened to halt a major US-EU trade deal in retaliation. This "geopolitical risk premium" is what is currently driving **Gold to record highs** and causing the Euro to struggle.

### 4. Crypto: The "Risk-Off" Liquidation

The combination of tariff threats and Fed uncertainty has hit crypto hard.

* **Price Levels:** Bitcoin has slipped below **$88,000** as investors flee to safe havens like Gold and Silver.
* **The "Clarity" Meeting (Jan 27):** Tomorrow, the SEC and CFTC heads are meeting to discuss the **Digital Asset Market Clarity Act**. Any positive news here could decouple crypto from the falling tech stocks, but for now, the "Trump Trade" is favoring traditional "haven" assets over digital ones.

### 5. US Government Shutdown (Jan 31 Deadline)

The week ends with a "funding cliff" this Saturday.

* **The Status:** While a $1.2 trillion deal is on the table, it hasn't passed the Senate yet.
* **The Impact:** A partial shutdown on **January 31** would further delay economic data, leaving the markets in a state of "informational blackout" heading into February.

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