Fed Holds Steady: Interest Rates Frozen at January Meeting as Markets Watch

No surprises from the Fed this month—rates are staying put. The central bank's decision to keep borrowing costs unchanged signals a cautious pause, not a pivot.

The Waiting Game

Traders held their breath, but got exactly what they expected. The Federal Reserve's latest meeting delivered a status quo verdict, leaving the benchmark interest rate untouched. It's a classic central bank move: watch, wait, and see if previous hikes have done their dirty work on inflation.

What 'Unchanged' Really Means

Forget dramatic cuts or hikes. This decision screams uncertainty. The Fed's playing it safe, opting to let the economic data catch up to its policy. Markets now parse every word from Powell & Co. for hints about the next move—when will the freeze thaw?

The Crypto Angle

While traditional finance holds its breath for rate cuts, digital assets march to their own beat. Bitcoin doesn't wait for Fed permission slips. A stagnant rate environment? It just highlights the appeal of an asset class that operates on a global clock, 24/7, bypassing the committee-room drama altogether. After all, in crypto, the only 'meeting' that matters is the consensus on the chain.

So the old guard hits pause. Meanwhile, the new financial system keeps building—proving once again that innovation rarely asks for a vote. Typical finance: a room full of experts deciding the cost of money, while a decentralized network just gets on with it.

Several individuals anticipate no change in interest rates from the Fed’s decision this January 

The Federal Reserve faces significant challenges in setting interest rates. Some of these problems include political interference and a split among Fed officials in their outlook for the future, sparking worries among policymakers and the financial markets as a whole.

Following this discovery, sources noted that Powell has consistently faced backlash from US President Donald TRUMP for his overly cautious, slow rate cuts. They also noted that this situation intensified when the Justice Department warned of impending criminal proceedings against Powell regarding a multi-billion-dollar renovation project at the Fed’s headquarters.

Reports indicate that Trump’s efforts to terminate Lisa Cook, a Member of the Federal Reserve Board of Governors of the United States, from her position are also pending a final Supreme Court ruling.

Meanwhile, from January 16-21, a survey was conducted, with results indicating that all 100 economists anticipated the Fed would keep rates steady in a range of 3.50% to 3.75% at its January meeting. Notably, 58% forecasted that this trend will remain unchanged throughout this quarter.

Jeremy Schwartz, a senior US economist at Nomura and one of the top forecasters for the US economy according to LSEG StarMine calculations, decided to comment on this survey. 

Based on his argument, the country’s economic prospects suggest the Fed needs to keep interest rates steady, further indicating the likelihood that the central bank will raise rates later this year or next year.

“However,” he added, “we believe that the Fed will hold rates steady for the rest of Powell’s term until May but expect that new leadership could manage to implement another 50 basis points of cuts later this year.” 

Trump set to announce his preferred choice for the Fed chair position next week 

During a survey on the Fed’s decision on interest rates, sources noted that individuals were divided on the fate of interest rates beyond this quarter, with only 55 of 100 people involved expecting a rate reduction after Powell’s term.

At this time, Scott Bessent, the United States Secretary of the Treasury, asserted that Trump might appoint his preferred choice to replace Powell as the next Fed chair as early as next week.

However, Bernard Yaros, the lead US economist at Oxford Economics, noted that, “There will be more resistance than ever regarding who becomes the next chair because of the criminal investigation… I don’t think Trump will manage to appoint people at the Fed who will lower interest rates.” 

Meanwhile, economic reports indicate that the United States experienced strong economic growth of around 4.3% in the third quarter. This year, growth is predicted to surge by 2.3%, reflecting a rise from the 2.2% recorded in 2025. Moreover, the 2.3% increase was revised up from 2% projected in December and has surpassed the Fed’s forecasted non-inflationary growth rate of 1.8%. 

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