Business & Economics
Fed Freezes Rates at 3.5-3.75% as Powell Nears Exit, Markets Bet on June Cut
On 29 Jan 2026 the FOMC kept its policy band unchanged, ending a three-meeting cutting streak and shifting expectations for the next reduction to after Chair Jerome Powell’s term expires in May.
Focusing Facts
- The decision passed 10-2, preserving the 3.50%–3.75% target range set since December 2025.
- Fed-funds futures now assign roughly 65 % odds of a quarter-point cut at the 10 June meeting, the first under a new chair.
- Dissenters Christopher Waller and Stephen Miran argued for a 25 bp cut, reviving Waller’s candidacy to replace Powell.
Context
A lame-duck chair presiding over a policy pause echoes March 1978, when outgoing Fed chief Arthur Burns resisted political pressure for easier money before William Miller took over—only to see inflation surge. Today’s standoff likewise pits an incumbent worried about sticky prices against a White House demanding cheaper credit. Structurally, it spotlights two long arcs: (1) the post-2008 norm of markets pricing policy well before the FOMC acts, and (2) the century-old tension between central-bank independence and elected power—visible in the 1951 Treasury-Fed Accord and again in Trump’s current DOJ probe of Powell. Whether the June cut materialises will shape not just 2026 growth but the credibility of a Fed that, for the first time since the Volcker era, may confront an overtly partisan appointment process. On a 100-year horizon, moments when politics breaches the Fed’s firewall often precede regime shifts in how the U.S. manages money and inflation; this could be another hinge year—or a footnote if independence holds.
Perspectives
Mainstream U.S. financial-market media
e.g., Reuters/Investing.com, Advisor Perspectives — They portray the Fed’s decision to pause after three cuts as prudent given sticky inflation and a still-solid economy, while signalling that data—not politics—will drive any later-2026 easing. Because these outlets depend on central-bank access and cater to investors who value policy stability, they tend to echo the Fed’s framing and underplay the political drama around Powell’s future.
Wall Street economist & trading desks commentary
e.g., CNBC, Investing.com UK, FXStreet — Analysts argue that cooling labour data and moderating inflation mean two-to-three additional rate cuts are still likely in 2026, keeping hopes alive for a dovish turn that would buoy risk assets and cap the dollar. Forecasts from banks and brokerages can skew dovish because lower rates boost equity valuations and trading activity that these firms profit from, so they may play down the Fed’s repeated caution.
Pro-Trump political outlets & statements amplified in media
e.g., Forbes, Al Arabiya — They echo President Trump’s demand that the Fed slash rates immediately, branding Powell a “moron” for keeping borrowing costs high despite the administration’s claim that inflation is no longer a threat. The coverage is driven by electoral incentives to secure cheaper credit before November and to discredit a Fed chair Trump wants replaced, so it dismisses the Fed’s inflation worries and paints the pause as malpractice.