The Fed paused â but markets are already positioning for the next move.
The January 28 FOMC meeting delivered a clear signal:
đ Monetary policy is no longer on a preset path.
Everything now depends on incoming data, the balance of risks, and macro dynamics.
Hereâs what actually matters from Powellâs message đ
đ§âđŒ Labor market: stabilizing, not strong
Powell acknowledged that the labor market is no longer overheating.
Unemployment remains around 4.4%, job growth has weakened on a 3-month basis, and key indicators â hiring, layoffs, vacancies, wage growth â show little change.
The Fed sees balance, not momentum.
đŠ Inflation: still elevated, but the source matters
Price pressure is now concentrated in goods and partially driven by tariffs.
Services inflation continues to cool.
This suggests inflation is becoming narrower â and potentially more temporary.
đ Rates: we are close to neutral
Powell stated that the current policy rate (3.50â3.75%) is within the range of plausible neutral estimates.
Translation: the Fed no longer sees policy as clearly restrictive.
Future cuts are not scheduled, but not off the table either.
Decisions will be made meeting-by-meeting, based on data.
đ Politics and Fed independence
Powell carefully avoided political narratives and repeatedly emphasized institutional independence.
This was not just communication â it was a signal of credibility to the market.
đ Market implications
âą High long-term yields are already tightening financial conditions
âą Gold benefits from macro uncertainty and real-rate expectations
âą Crypto remains highly sensitive to liquidity expectations
âą Equities stay supported â but increasingly dependent on inflation data
âł The real catalyst: March FOMC
Before the next meeting, we will get 2 CPI and 2 PPI releases
If disinflation continues (and leading indicators already point in that direction), the narrative will shift from:
âWill there be cuts?â â âHow soon will they begin?â