2026-01-27 08:35:00
Goldman Sachs says that this week’s FOMC meeting is likely to be a boring affair, with the Fed not going to offer any policy changes and only some minor tweaks to their statement language. Overall, that won’t give markets too much to work with about what will come next and Fed chair Powell will also play it safe in his press conference.
“The January FOMC meeting is likely to be uneventful, with no change to the fed funds rate, only minor changes to the statement, and few hints about the future policy path. Chair Powell is likely to emphasize that the FOMC has just delivered three cuts that should help to stabilize the labor market and is well positioned for now while it assesses their impact.”
As a reminder, Fed funds futures are not pricing in anything for this week with ~97% odds of no change to interest rates. The first full 25 bps rate cut is only priced in for July with odds of a move in June hovering around ~75%. The latter is where Goldman Sachs sees the Fed moving later this year before just one more rate cut to finish the cycle:
“We have penciled in the next 25bp rate cut in June, followed by a final cut in September to 3-3.25%.”
That roughly fits with what Fed funds futures have priced in, which is ~46 bps of rate cuts by the end of 2026.
