Fed likely to hold rates as Powell faces DOJ probe ahead of May departure

Businessinsider: The Federal Reserve is expected to hold interest rates steady at its first policy decision of the year on Wednesday, while Chair Jerome Powell faces a Department of Justice probe and rising political pressure as his term ends in May. Market-based projections from CME FedWatch give Fed leaders a near-total chance of holding rates.

After three cuts in 2025, the Fed has penciled in one rate cut for the new year, and officials say these rate decisions will affect the job market, consumer prices, and corporate America. Recent data — fewer-than-expected job gains in December, an unemployment rate above 4%, and inflation at 2.7% — make a cut unlikely in the near term.

"There's little chance the Fed will vote to cut rates this week," said NerdWallet's senior economist Elizabeth Renter, who added that keeping rates as-is indicates the risks to the Fed's dual mandate are relatively equal. A hold would leave borrowing costs for homes, cars, and credit cards largely unchanged and could push companies toward layoffs or hiring freezes.

Key Topics

Business, Jerome Powell, Federal Reserve, Interest Rates, Inflation, Job Market