The Federal Reserve, in coordination with key global central banks, is poised to hold interest rates steady at its upcoming January 28 meeting, reinforcing a stance of monetary policy caution despite mounting political pressure. Prediction markets, including Polymarket, now assign a 99% probability to the Fed maintaining its current restrictive stance, a sharp increase from near 50% just days prior.
The Fed's position is backed by a coalition of central banks, including the Bank of England (BoE) and the European Central Bank (ECB), who have voiced support for Fed Chair Jerome Powell's independence. This comes as the administration of US President Donald Trump has repeatedly pressured Powell for lower borrowing costs. The political tension is underscored by reports of grand jury subpoenas facing the Fed and a Supreme Court review concerning the potential dismissal of Federal Reserve Board Governor Lisa Cook.
Economic data supports the hold, with strong U.S. job growth, firm wage increases, and core inflation persisting above the Fed's 2% target. The CME FedWatch Tool aligns with market consensus, showing over 95% odds for unchanged rates. Officials intend to observe the impact of three consecutive rate cuts implemented by late 2025 before considering further action.
Globally, central banks in Brazil, Canada, and Sweden are also expected to keep rates steady, while some analysts anticipate African central banks may pursue easing measures. Key economic reports from Australia, Brazil, Japan, China, and Europe will be closely watched in the coming week.
For cryptocurrency markets, the sustained high-rate environment continues to tighten liquidity, reducing speculative capital flows. Bitcoin has been range-bound near $88,000, with altcoins struggling for momentum. The market's immediate focus will shift to Powell's post-meeting commentary for any hints on the future path of rates in 2026.
