Fed's January 2026 Interest Rate Decision: Expectations and Analyses

When Will the Fed's January 2026 Interest Rate Decision Be Announced?

The Fed, or the U.S. Federal Reserve, announces its monetary policy decisions at regularly scheduled meetings. These meetings are generally held at the end of every month or every two months and are based on various economic data.

The next Fed meeting will take place on January 27-28, and the interest rate decision will be announced on January 28 at 10:00 PM.

What Are Market Expectations?

Significant volatility is observed in the markets before and after Fed meetings. In this context, investors and analysts closely monitor the Fed's possible interest rate decisions. The dollar index and gold prices may also fluctuate based on these decisions.

According to FedWatch, the likelihood of the Fed keeping its policy interest rate unchanged at the meeting on January 28 is around 94.5%. For the March meeting, the probability of a rate cut is 16%. For the entirety of 2026, the market expects at least 1 and at most 2 rate cuts.

Which Factors Will Be Influential?

Following consecutive interest rate cuts in the past, it is expected that the Fed will take a more cautious approach in this meeting. Considering that the employment data announced in December 2025 fell to the weakest levels since the pandemic, the slight decrease in the unemployment rate has brought some relief to the markets.

In particular, predictions that a potential successor to Powell would support interest rate cuts could lead to fluctuations in the markets. However, the current inflation rate being close to the 2% target restricts the Fed's maneuvering room.

In this context, Morgan Stanley has shifted its expectations for rate cuts in 2026 to June and September, indicating that the Fed's decisions will increasingly depend on "being convinced that inflation has declined permanently" rather than "saving employment." An early easing decision by the Fed during this period could potentially lead to a revival of current inflation.

Conclusion and Important Statements

As much as the Fed's interest rate decision, statements from Fed Chair Jerome Powell can also cause significant fluctuations in the markets. Therefore, it is crucial for investors to follow Powell's comments in real-time for asset pricing.