The U.S. Federal Reserve is widely expected to keep interest rates unchanged at 3.5%–3.75% in its January 2026 meeting. This pause comes after three consecutive rate cuts last year, which pushed borrowing costs to their lowest level since 2022.
What matters now isn’t the decision itself—but what the Fed says next. Traders will be listening closely for clues on when the next rate cut could arrive, although officials may signal a longer wait before making any further moves.
📊 Why the Fed is being careful:
Job growth is clearly slowing
Unemployment remains stable
Inflation is still running above the Fed’s 2% target
These conditions support a cautious, wait-and-see stance. According to the Fed’s December projections, policymakers currently expect just one 25 bps cut in 2026, with markets pricing it most likely around June, and a smaller probability of another move later in the year.
🎤 All eyes on Powell:
Jerome Powell’s press conference will be especially important. It’s his first public appearance since reports of grand jury subpoenas, meaning questions around political pressure and the Fed’s independence could take center stage—adding extra tension to an already critical meeting.
Markets are watching. Volatility could follow.
