FOMC Seeing Holding Rates Steady at January Meeting, Powell Comments in Focus

02:39 PM EST, 01/27/2026 (MT Newswires) -- The Federal Open Market Committee is widely expected to maintain the target range for its federal funds rate at 3.50% to 3.75% at its meeting this week, putting the focus on post-meeting comments from Federal Reserve Chairman Jerome Powell.

The CME's Fed Watch Tool currently shows a 97.2% chance being priced in for no change to the current target range and a 2.8% chance of a 25-basis-point reduction to a range of 3.25% to 3.50%.

The FOMC's statement following Wednesday's meeting is due for release at 2:00 pm ET, with Fed Chair Powell's press conference scheduled to begin at 2:30 pm ET.

There will not be an update to the Summary of Economic Projections at this week's meeting.

Division remains among the Fed officials over the path of monetary policy.

Fed Governor Stephan Miran, whose term ends on Jan. 31, has continued to advocate for more than a cumulative 100 basis points of further rate reduction over coming meetings, and possibly as much as 150 basis points of reduction due to concerns about weakness in the employment outlook.

Other Fed officials have agreed that more easing of policy is needed in anticipation of slowing payrolls growth without indicating an appropriate size for that reduction.

Fed Governor Christopher Waller said on Dec. 17 that the FOMC should continue to lower its policy rate at a "moderate" pace due to the soft labor market, suggesting that he is not concerned about a reacceleration of inflation and said that tariffs are likely to have a one-time effect on price levels and not provide ongoing upward pressure.

However, Minneapolis Fed President Neel Kashkari said on Jan. 5 that the current stance of policy is already close to neutral and added on Jan. 14 that he does not see a reason to lower interest rates further at the January FOMC meeting but said it would be possible to lower them later in the year.

Additionally, Philadelphia Fed President Anna Paulson suggested on Jan. 4 that the FOMC could delay the next rate reduction until later in the year so that it can observe the effects of the easing that has already been put in place.

Both Kashkari and Paulson are set to vote on the FOMC this year.

Fed Chairman Powell's comments on the outlook for policy and the economy are always closely-watched but will get added attention this time because of charges that the Department of Justice has brought against Powell alleging that he has mishandled the remodeling of the Fed's Washington, DC, headquarters.

Powell diverted from his usual apolitical stance to issue a statement on Jan. 11 saying that he believes the probe to be an effort on the part of the Trump Administration to influence monetary policy decision.

In addition to receiving questions about the case, Powell is likely get asked about his potential replacement, the make-up of the FOMC board and if he plans to remain as a governor after his term as chairman ends in May.

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