2026-01-27 03:25:00
The January FOMC meeting is expected to pass quietly, with rates on hold and markets focused on Powell’s tone rather than policy action.
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January FOMC meeting, Fed widely seen holding rates unchanged
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Powell comments on labour market and neutral rate in focus
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Political context may overshadow policy guidance
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Goldman sees two Fed cuts in 2026, starting mid-year
This week’s January meeting of the Federal Open Market Committee is widely expected to deliver few surprises, with policymakers seen holding interest rates steady and avoiding any major policy signals, according to major Wall Street banks.
BofA Securities says the meeting is likely to be quiet, with Chair Jerome Powell expected to strike a cautious tone at his press conference. While policy changes are unlikely, investors will listen closely for Powell’s assessment of December’s drop in the unemployment rate and his views on whether strong economic momentum is consistent with a higher neutral rate of interest.
BofA also flags that political considerations may feature more prominently than policy guidance, as the Fed seeks to reinforce its independence and avoid fuelling market speculation around the near-term rate path.
A similarly subdued outlook is shared by Goldman Sachs, which expects the Fed to maintain current rates with broad committee support. Goldman sees Governors Christopher Waller and Michelle Bowman backing the decision, leaving Stephen Miran as the likely lone dissenter.
Looking beyond January, Goldman expects the Fed to remain on hold for several months, forecasting two rate cuts in 2026, with easing most likely to begin around June. For now, both banks see the Fed content to wait for clearer evidence on inflation, labour market dynamics and financial conditions before adjusting policy.
Overall, the January meeting is expected to reinforce the Fed’s patient stance, with markets likely to treat the event as a checkpoint rather than a catalyst.
