Fed Meeting: Rate Hold Likely as Powell Prepares to Take Center Stage
The Federal Reserve is widely expected to keep interest rates steady when it wraps up its January policy meeting. What Chair Jerome Powell signals about the elevated inflation, a softening labor market, and the future of the Fed might matter more.
Inflation remains elevated. Core PCE came in at 2.8% last week, well above the Fed’s 2% target, reinforcing policymakers’ cautious stance on rate cuts.
The labor market shows signs of softening. Consumer confidence around the labor market is falling. The number of consumers who said jobs are “hard to get” rose to a postpandemic high, according to the Conference Board’s consumer confidence index for January.
Questions around Fed independence are growing. The Justice Department sent the Fed grand jury subpoenas this month, threatening a criminal indictment tied to testimony Powell delivered in June before the Senate about the Fed’s renovation of its headquarters. Powell, who has denied wrongdoing, said the subpoenas are a pretext for President Donald Trump wanting interest rates lower.