Fed January Decision Landed: Benchmark Interest Rate Unchanged, Policy Could Be Relaxed if Tariff Inflation Peaks and Then Falls
BlockBeats News, January 29, Beijing Time, at 3:00 am today, the Federal Reserve announced in its first interest rate decision of 2026 that it will keep the benchmark interest rate unchanged at 3.50%-3.75%, pausing the consecutive three rate cuts since September last year, in line with market expectations.
Goldman Sachs analyst Kay Hayes said that given the strong economic data and signs of stability in the labor market, the Federal Reserve is likely to temporarily maintain its policy. We expect rate-cutting policies to resume later this year as slowing inflation allows the Fed to cut rates two more times as part of its "normalization" process, bringing rates back to a level the Federal Open Market Committee members see as neutral.
Fed Chair Powell said in subsequent remarks that the unemployment rate has shown some signs of stabilization, inflation remains slightly above target, and the labor market may be stabilizing after gradually softening. If this year the tariff-induced inflation peaks and then falls, it would signal room for policy easing. Rate hikes are not anyone's base case assumption. No one expects a rate hike at the next meeting.
When asked if the Fed has responded to the Department of Justice's subpoena, Powell said he would not further elaborate on any statement regarding the subpoena. On the issue of the next Federal Reserve Chair appointment, Powell remained tight-lipped, saying, "Stay away from electoral politics, don't get involved in electoral politics. Don't do it," Powell said at a routine press conference following the Fed's latest monetary policy meeting.
After the interest rate decision was announced, gold and silver continued their previous gains, with spot gold approaching $5600 this morning, up nearly $600 for the week, and spot silver breaking through $119 per ounce, up 1.91% intraday.
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