Fed holds rates as Powell signals no urgency to cut

All news

Top Stories

Editors' Picks

Crypto News

Financial News

Currencies

Market Voices

Companies

Regulators News

Central Banks News

Yaroslav Dmytrenko

29.01.2026

Fed holds rates as Powell signals no urgency to cut — Powell pushes back rate cuts, citing inflation and labor strength

At its first meeting of 2026, the Federal Reserve kept interest rates unchanged in the range of 3.5%–3.75%, as widely expected. During the post-meeting press conference, Fed Chair Jerome Powell made it clear that the regulator is in no hurry to cut rates, as inflation remains above target and the labor market continues to show resilience.

Since the rate decision itself had already been priced in by markets, traders and analysts focused primarily on Powell’s press conference, hoping to glean additional signals from his tone and remarks. However, the Fed chair was extremely cautious in his wording and offered no indication of a policy pivot, a series of rate cuts, or even a tentative timeline for the first reduction. Instead, he emphasized that the Fed remains data-dependent and insulated from political pressure.

“The U.S. economy grew at a solid pace last year and enters 2026 on a strong footing, with job growth remaining moderate, the unemployment rate showing some signs of stabilization, and inflation still somewhat elevated relative to our objectives,” Powell said in his opening statement.

Meanwhile, the decision to keep rates unchanged was not unanimous. Two members of the Federal Open Market Committee (FOMC), Federal Reserve Governors Steven Miran and Christopher Waller, dissented and voted in favor of cutting interest rates by 25 basis points.

Given that at the previous meeting policymakers had cast votes both for rate cuts and for rate hikes, the latest outcome suggests that sentiment within the Fed is gradually shifting in a more dovish direction.

That said, while Powell openly stated that there is currently little support within the Fed for raising rates further, he also repeatedly warned about upside inflation risks, particularly around mid-year, driven by the potential impact of tariffs. He also stressed that inflation has yet to return to the Fed’s 2% target.

According to Powell, as in previous years, the Fed will continue to make decisions based on incoming data. He indicated that as long as the labor market remains strong, there is no urgency to cut rates — a stance that likely pushes the first rate reduction into the second half of the year.

Preserving independence is the key advice to a successor

Several questions at the press conference focused on the independence of the Federal Reserve. In response, Powell offered three pieces of advice to his successor:

“First advice: stay out of electoral politics. Don’t get involved in electoral politics. Don’t do it,” Powell said.
His second point stressed that democratic accountability for the Fed lies with Congress, describing regular engagement with lawmakers as an essential and ongoing responsibility rather than a burden.
“Finally, it’s easy to criticize public institutions,” Powell added. “But anyone taking this job will soon meet the most capable group of people they have ever worked with — the staff of the Federal Reserve. There is no better group of professionals more dedicated to the public good.”

Powell is serving his second term as Fed chair and is expected to step down from the position in mid-May. While he could technically remain on the Board of Governors until 2028, past Fed chairs have traditionally left the institution entirely rather than remain in a reduced role.

The administration of Donald Trump has yet to decide on a future Fed chair, with presidential economic adviser Kevin Hassett widely seen as the leading contender. Trump, however, has continued to push for a more accommodative monetary policy and lower interest rates in order to inject more liquidity into the economy, stock market, and crypto market.

As we wrote, S&P 500 breaks 7,000 as AI optimism fuels rally

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.