#FedWatch Key Timing & Current Expectations
· Meeting Dates: The Federal Open Market Committee (FOMC) meeting is scheduled for January 27-28, 2026.
· Rate Decision Time: The interest rate decision and statement are expected at 2:00 p.m. ET on Wednesday, January 28.
· Press Conference: Fed Chair Jerome Powell will hold a press conference shortly after the announcement.
· Market Expectation: There is a 97% probability that the Fed will hold interest rates steady at their current range of 3.5% to 3.75%.
📈 Market Forecast for Future Rate Cuts
The consensus among Wall Street forecasters is for a gradual and limited easing of policy through 2026.
2026 Rate Cut Forecast
· CNBC Fed Survey Average Outlook: Two more quarter-point cuts in 2026
· Expected Timing of Next Cut: Most likely at the June meeting or later
· Expected Year-End 2026 Fed Funds Rate: Approximately 3.0%
⚖️ What's Guiding the Fed's Decision?
Several economic and political factors are central to the Fed's current "wait-and-see" stance.
Economic Data
· Inflation: Remains above the 2% target, with core PCE inflation at 2.8% (Oct-Nov 2025). The Consumer Price Index (CPI) was sticky at 2.6% in December.
· Labor Market: Shows signs of stabilization with unemployment ticking down to 4.4% in December.
· Growth: The economy is steadily growing, reducing urgency for immediate cuts.
Internal Committee Dynamics
· Divided Views: The FOMC is split between members who want to see more progress on inflation before cutting again and those focused on supporting the job market.
· Voter Sentiment: Key regional bank presidents with voting power this year have recently expressed skepticism about the need for immediate further cuts.
Political Pressure & Independence
· Unprecedented Scrutiny: The Fed is operating under significant political pressure. Chair Powell stated that a Justice Department investigation into him is a pretext for the Fed not cutting rates faster.
· Leadership Transition: President Trump is expected to name a successor to Chair Powell, whose term ends in May 2026. Survey respondents widely expect former Fed Governor Kevin Warsh to be the pick.
· Independence Concerns: These events have raised major questions about the central bank's independence.
🔭 What to Watch Next
After today's decision, focus will shift to the March 17-18, 2026 FOMC meeting. However, many economists see June as a more likely window for the next potential rate cut. Key influences will be incoming data on inflation and the labor market, as well as developments regarding the Fed's leadership and political independence.