Fed Update | Video: January 2026 FOMC Reaction
- Edward von der Schmidt
- 3 days ago
- 2 min read
The Federal Reserve signaled that policy will remain in a holding pattern. Risks to employment and inflation appear to have lessened and the economic outlook has improved.
A sharp deceleration in prices or rapid deterioration in labor markets could change the Fed's thinking and compel lowering rates sooner, but the FOMC believe they are "well-positioned" to consider the "extent and timing" of future policy adjustments.
Given concerns surrounding the central bank's independence and Powell's successor as Chair, the Fed appears set to hold through April - if not longer.
Video
Transcript
Hi.
I just published my initial thoughts on today's Fed meeting where the FOMC chose to hold rates steady.
I wanted to highlight four key observations.
The first is that the Fed has improved their economic outlook.
They think that the pace of activity has gone from moderate to solid, which is an improvement for growth, and along with that, they see diminished risk to the labor market and inflation.
Unemployment has shown some signs of stabilizing, and inflation has demonstrated favorable trends where one-off tariff inflation in goods hasn't shown up in services which are actually experiencing disinflation.
This leaves the Fed comfortable with where policy rates are and they think that their stance is appropriate at this time.
The second thing is that the Fed is reiterating their commitment to a hold.
They kept the language about extent and timing of future adjustments.
They keep saying that they're well positioned, that current policy is appropriate.
They're going out of their way to communicate that message to say that you shouldn't be looking out for any adjustments in the near term, meaning the next few meetings.
The third thing is that could change, and Powell gave conditions for why they might actually cut rates sooner than they plan to today.
That would be a rapid deterioration in labor markets, or a rapid deceleration in inflation where they no longer feel a need to keep rates sort of on the higher side of neutral.</p>
The last thing that I wanted to highlight is that there's broad consensus on the Fed for this policy hold.
Even though you had two dissents at today's meeting, both voters and non-voters were in favor of keeping things where they are so that they have time to assess the incoming data, the evolving outlook, and the balance of risks.
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Thank you for your time.
This is not financial advice and should not be taken as such. The observations and opinions expressed here are protected by copyright and belong to Datum Research LLC. All rights reserved.