FED January Meeting Expectations: FED is expected to keep the federal funds rate steady at the current range of 4.25% to 4.5%
This pause is seen as a part of a cautious approach by the Fed, waiting for clearer signs of economic weakening or further progress on inflation before considering additional rate cuts
- 99% probability priced in for a hold in tomorrow’s meeting
- Fed expected to pause until May/June meeting
- Only 2 cuts are expected in 2025, and 1 in 2026
Some of the analyst expectations or commented for the expected FED pause:
- The economy is still running a bit hotter than expected. With GDP for Q4 expected to come in at ~3.2
- Inflation progress has stalled out since the second half of 2024
- All the fiscal policies proposed (tariffs, deregulation, taxes, immigration, oil drilling) create a lot of uncertainty, which is another reason to pause currently
- Powell should signal a pause but without committing to a specific date because of all the uncertainty currently
