Finance

Fed Holds 3.50%-3.75% Rate; Traders Eye 2026 Path

The Federal Reserve is widely seen keeping the federal funds rate at 3.50%-3.75% when it announces its decision at 2:00 p.m. ET on Jan. 28, 2026. Powell’s 2:30 p.m. ET press conference will be the moment markets hunt for clues about the longer-term policy path.

📅 January 28, 2026
⏱️ 2 min read
Fed Holds 3.50%-3.75% Rate; Traders Eye 2026 Path

Key Takeaways

  • Fed is expected to hold the rate at 3.50%-3.75% today, per market expectations.
  • CME FedWatch shows pricing for up to two 25-basis-point cuts in 2026.
  • Allianz Trade’s Maxime Darmet predicts only one 25bp cut in 2026, likely in June.
  • Longer-term rates will reflect inflation and other factors even if the policy rate is held.
  • Prediction markets show Rick Rieder as a leading candidate to succeed Powell, with about 43% odds on Kalshi vs. 29% for Kevin Warsh.

People Involved

  • Jerome PowellFed Chair
  • Maxime DarmetAllianz Trade senior economist for the U.S., France and U.K.
  • Rick RiederBlackRock senior managing director, CIO of Global Fixed Income
  • Kevin WarshFormer Federal Reserve Governor

Entities Involved

  • Federal ReserveU.S. central bank setting monetary policy
  • CME GroupOperator of the FedWatch probability tool for rate expectations
  • Allianz TradeEconomic research arm; contributor Maxime Darmet's employer
  • BlackRockAsset management firm; employer of Rick Rieder
  • KalshiPrediction market platform hosting odds on leadership succession
  • Federal Open Market Committee (FOMC)Fed's policy-making body

MarketMoodz Analysis

Investors should calibrate portfolios around a Fed that signals slower or fewer cuts. A hold near current levels can keep short-duration yields anchored, but long-duration assets and cyclical equities may struggle if the dot plot suggests minimal easing ahead. If traders push in more cuts, risk assets could rally; if not, volatility around inflation data tends to persist.

Historically, the pace of rate cuts follows the inflation trajectory and the labor market's resilience. With inflation cooling and productivity contributing to GDP growth, markets have debated how quickly the Fed will ease in 2026—pricing in as many as two cuts at times and, at other moments, forecasting only a single move.

What to watch next: Powell’s remarks at the press conference, the updated dot plot, and incoming inflation and payrolls data will be the clearest signals on the 2026 path. Monitor shifts in long-term yields, market-implied cuts, and any guidance that hints at the timing of a June or later move.

Source: Original Article

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