US Fed meeting:The Federal Reserve’s The policy-setting panel is set to meet on January 27-28, amid expectations that policymakers will keep the benchmark interest rate unchanged following several cuts in recent months.
The Federal Open Market Committee (FOMC) has already reduced rates by 25 basis points at each of its last three meetings, aimed at stopping a softening job market from tipping into higher unemployment. This week, the committee is set to meet to decide whether to lower the federal funds rate from its current 3.5%–3.75% range.
After delivering three straight rate cuts, financial markets now anticipate that policymakers will pause and keep interest rates unchanged, taking time to assess the economy’s trajectory and determine which risks pose the greater threat.
Why is US Fed expected to hold rates?
Fed officials are widely expected to hold the rate at the next meeting of the FOMC on Wednesday amid a mixed picture on both the inflation and jobs front and elevated price pressure, said Mahesh Ojha, VP Research & Business Development at Kantilal Chhaganlal Securities.
Seema Srivastava, Senior Research Analyst at SMC Global Securities, also echoed a similar view, suggesting that the FOMC The meeting is likely to signal policy continuity as officials weigh evolving economic conditions.
“A pause would align with the Fed’s data-dependent approach, allowing policymakers to evaluate whether recent disinflation is durable while monitoring signs of economic cooling. Inflation has eased from prior peaks but remains above the Fed’s 2% goal, reinforcing the need for caution against premature easing. Meanwhile, consumer spending remains steady, employment conditions are relatively tight, and financial markets have loosened modestly on expectations of future cuts,” said. Srivastava.
Holding rates steady provides flexibility to assess incoming data on wages, core inflation, and labor market trends before committing to further adjustments, the expert added.
Srivastava further explained thatHis stance also tempers overly aggressive market bets on near-term cuts, keeping financial conditions aligned with policy objectives.
“Ultimately, a status-quo decision would reaffirm the Fed’s commitment to prudent monetary stewardship, emphasizing that future moves will be guided by economic evidence rather than short-term sentiment or external pressures,” she added.
The CME FedWatch Tool also showed that market participants were factoring in a 97% probability that the Fed would keep rates unchanged, with futures markets projecting a higher chance of another cut only in June, stated a Reuters report.
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
