Fed Meeting: Will They or Won’t They?

The chaps at the American Federal Reserve, bless their cotton socks, are convening today to ponder the weighty matter of interest rates. It’s all rather frightfully important, you know. The Federal Open Market Committee – a bit of a mouthful, what? – will be disseminating its wisdom at precisely 2:00 p.m. Eastern Time, to be followed, naturally, by a pronouncement from the esteemed Jerome Powell at 2:30 p.m. ET. One shudders to think of the paperwork involved.

The consensus amongst the betting men is that rates will remain resolutely unmoved, a staggering 97% wagering on stasis. There’s a spot of bother brewing amongst the policy wonks, mind you. Some favour a tweak downwards, to help chaps borrow a bit easier, whilst others, rather sternly, point to the lingering spectre of inflation and the generally robust American economy. A bit of a pickle, really.

Is Fed Likely to Hold Rates Steady

The market, in its infinite wisdom, anticipates that a rate reduction would be rather jolly for ‘risk assets’ – which, as far as I can gather, includes those digital doodads, cryptocurrencies, and the like. Apparently, these chaps on Polymarket are putting their money where their mouth is, wagering a 70% chance of a quarter-point diminution. However, should rates stand firm, the mood could sour quicker than a lemon.

According to the Fed Rate Monitor Tool (sounds terribly scientific, doesn’t it?) at Investing.com, there’s no less than a 97.7% probability of… nothing happening. A mere 2.3% chance of a cut. Dash it all.

Recent economic bulletins suggest the status quo is perfectly acceptable. Inflation is dawdling along at 2.7%, while the Fed’s favourite measurement, the PCE, has crept up to 2.8%. Furthermore, the job market seems to be holding its own, despite that government shutdown business last year. A resilient bunch, these Americans.

Roger Ferguson, a former high-up at the Fed, suggests they’ll be taking a ‘wait and see’ approach – a refined way of saying they’re dilly-dallying, if you ask me.

“The economy continues to show underlying strength, with durable goods orders holding up and unemployment remaining relatively low,” Ferguson noted, adding that inflation is still above the Fed’s 2% target.

This allows the Fed to dawdle a bit longer before cutting rates, waiting for definitive proof that inflation is truly on the wane.

Powell Expected to Strike a Familiar Tone

One shouldn’t anticipate any earth-shattering revelations from Mr. Powell’s address. He’ll likely reiterate the importance of data – frightfully dull, that – and avoid any firm commitments to imminent rate adjustments.

Chris Larkin, a fellow at E*TRADE from Morgan Stanley, thinks politics might throw a spanner in the works. Rather unsportsmanlike, if you ask me.

“Even though the Fed isn’t expected to cut interest rates, Powell’s press conference may be as much about Fed independence as it is policy,” Larkin said.

FED Rate Cut Forecast for 2026 Remains Uncertain

Looking ahead to 2026, predictions are all over the place, like pigeons in Trafalgar Square.

Goldman Sachs envision American growth accelerating to a rather ambitious 2-2.5%, fuelled by tax cuts and financial shenanigans. Their chap, Jan Hatzius, predicts a pause in January, followed by cuts in March and June, potentially lowering rates to 3-3.25%. Rather optimistic, wouldn’t you say?

J.P. Morgan, ever the pessimists, reckon rates will stay put well into 2026, with the possibility of a hike in 2027 if inflation proves particularly stubborn.

Over at TD Securities, Oscar Munoz optimistically believes easing is still on the cards.

“While Powell may sound noncommittal in the near term, the median Fed official still looks for easing this year,” Munoz wrote.

Bitcoin and Risk Assets Face FOMC Volatility

Although today’s deliberations may seem uneventful, historical precedent suggests that FOMC meetings frequently cause tremors in the world of Bitcoin and similar ventures.

Ali Charts, a purveyor of data, reveals that Bitcoin has a nasty habit of slumping after Fed meetings – seven out of eight times in 2025, with losses ranging from 6% to a rather alarming 29%. A most discouraging pattern.

It seems that even when the market is convinced of a positive outcome, the aftermath often delivers a punch to the kidneys.

Liquidity Signals Could Shift the Narrative

Arthur Hayes, a former chap at BitMEX, points to trouble in the Japanese bond market as a potential wildcard. A weakening yen and rising yields could prompt intervention, resulting in a bit of extra liquidity.

“Such intervention would effectively inject liquidity,” Hayes said, adding that it could ease pressure on U.S. Treasury yields and provide short-term support for risk assets, including Bitcoin.

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2026-01-28 09:56