January FOMC Interest Rate Meeting

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At 3:00 AM Beijing time on January 29, the Federal Open Market Committee (FOMC) will release the first interest rate decision of 2026.Following this, Federal Reserve Chair Jerome Powell will hold a press conference on monetary policy at 3:30 AM.

In contrast to the market’s high expectations for a rate cut at the end of last year, this interest rate meeting has almost been set to 'remain on hold.'CME FedWatch data shows that the probability of the Fed maintaining the interest rate in the range of 3.50%-3.75% exceeds 95%.Major institutions such as Barclays also unanimously expect that the FOMC will pause rate adjustments and signal that it is not in a hurry to cut rates further.

This shift in expectations has been strongly supported by recent economic data: the momentum of U.S. economic growth has stabilized, and pressures in the job market have eased slightly. Morgan Stanley pointed out that the Fed might even upgrade its assessment of economic growth in the policy statement from [moderate] to [solid].

The real threat comes from mounting political pressure from the White House, which is posing a severe test to the Fed's independence.

。Recently, Powell faced threats of criminal litigation over office renovation matters, seen as political pressure to force faster rate cuts; Powell has strongly responded, stating that such attacks are merely excuses demanding aggressive rate cuts.

Despite ongoing political noise, the futures market has scaled back its expectation for interest rate cuts in 2026 to around 44 basis points, with expectations for the first rate cut fully priced in for the July meeting. This view is gradually aligning with the Fed officials' earlier prediction of only one more rate cut in 2026, standing in stark contrast to the Trump administration's demand for significant rate cuts.

🔥Key highlights of this meeting:

1. 'Dovish pause' or 'Hawkish pause':Although it is highly likely that interest rates will remain unchanged, the wording of the policy statement is crucial. The market will closely watch whether the Fed retains a dovish stance or paves the way for the end of the rate-cutting cycle.

2. Powell’s Future and Counterattack:His term as chairman will end in May, and it is possible that Trump could announce his successor during this interest rate meeting. Will Powell defend the independence of the Federal Reserve at the meeting? And how will he justify the 'pause in rate cuts'?

3. Internal Consensus and Divisions:Will the board members advocating aggressive rate cuts cast dissenting votes again? What kind of opinion splits will emerge within the FOMC? This is a core signal for judging a policy shift.

This interest rate decision has long since ceased to be a simple rate-setting event; it is also a defense of the Federal Reserve's independence. How will Powell balance economic data with political rhetoric under such pressure?Fellow investors are welcome to tune in and watch, so you don’t miss any exciting details!

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