{"id":17811,"date":"2026-01-27T12:50:48","date_gmt":"2026-01-27T12:50:48","guid":{"rendered":"https:\/\/topat10.com\/?p=17811"},"modified":"2026-01-27T12:50:48","modified_gmt":"2026-01-27T12:50:48","slug":"dont-hold-your-breath-for-a-fed-rate-cut-any-time-soon-in-fact-some-say-a-hike-could-be-on-the-cards","status":"publish","type":"post","link":"https:\/\/topat10.com\/?p=17811","title":{"rendered":"Don\u2019t hold your breath for a Fed rate cut any time soon. In fact, some say a hike could be on the cards"},"content":{"rendered":"\n<div id=\"\">\n<p>Here we go again. It\u2019s Federal Open Market Committee (FOMC) meeting week, and Chairman Jerome Powell is likely to once again disappoint the White House by announcing a hold to the base interest rate. <\/p>\n<p>How fierce the reaction from the Oval Office will be is anyone\u2019s guess, but markets are fairly convinced that the two-day conference concluding tomorrow will result in the interest rate being held steady in the range of 3.5% to 3.75%. Per CME\u2019s <a aria-label=\"Go to https:\/\/www.cmegroup.com\/markets\/interest-rates\/cme-fedwatch-tool.html\" href=\"https:\/\/www.cmegroup.com\/markets\/interest-rates\/cme-fedwatch-tool.html\">FedWatch barometer<\/a>, there\u2019s a only a 2.8% likelihood of a cut tomorrow, even by the smallest increment of 25 basis points.<\/p>\n<p>But while investors have reached a general consensus on the outcome of this week\u2019s deliberations, they\u2019re not quite so in line on the fiscal path for the rest of the year. Many economists, for some time now, have been expecting <a aria-label=\"Go to https:\/\/fortune.com\/2026\/01\/15\/economy-marginally-improving-fed-beige-book-rich-consumers\/\" href=\"https:\/\/fortune.com\/2026\/01\/15\/economy-marginally-improving-fed-beige-book-rich-consumers\/\">2026 to be the year of further easing<\/a>.<\/p>\n<p>Their reasoning points to a weakening labor market and relatively low pass-through thus far from the White House\u2019s tariff regime. In addition, Chairman Powell will be replaced in the spring by a candidate nominated by President Trump, who has already said he wants a dovish individual at the head of the Fed.<\/p>\n<p>Dissenters to that narrative include investment bank Macquarie, where <a aria-label=\"Go to https:\/\/fortune.com\/2025\/09\/05\/labor-market-balance-unemployment-payroll-jobs-immigration\/\" href=\"https:\/\/fortune.com\/2025\/09\/05\/labor-market-balance-unemployment-payroll-jobs-immigration\/\">North America economists David Doyle<\/a> and Chinara Azizova see the Fed\u2019s <a aria-label=\"Go to https:\/\/fortune.com\/2026\/01\/13\/wall-street-trump-fed-plot-backfire-interest-rate-cuts\/\" href=\"https:\/\/fortune.com\/2026\/01\/13\/wall-street-trump-fed-plot-backfire-interest-rate-cuts\/\">next move as a <em>hike <\/em>to the base rate<\/a>\u2014potentially in the final quarter of this year.<\/p>\n<div class=\"paywall\">\n<p>\u201cUnderpinning this is our belief that the labor market is improving, and that unemployment will decline ahead on a trend basis,\u201d the duo wrote in a note seen by <em>Fortune<\/em> this week. \u201cA key risk to this view is the potential for an incoming Fed Chair to sway the committee in a more dovish direction. However, we believe this risk is mitigated by a potential shift in the new Chair\u2019s incentives once they assume the role.\u201d <\/p>\n<p>Their view is bolstered by the idea that the Fed may have reached the point of \u201cnormalization\u201d of the base rate. In the years following the pandemic, America\u2019s base rate rocketed as high as 5.5% to bring rampant inflation under control. So began the questions of how the Fed would \u201cland the plane\u201d and bring down price rises without plunging the economy into a recession\u2014a task in which it was successful.<\/p>\n<p>However, because the years before the pandemic had seen the base rate at around 0.25%, speculators widely expected interest to trend down back toward pre-pandemic levels and even-out around the 2% mark.<\/p>\n<p>Questions are now mounting as to the damage that the exceptionally low rate caused, and whether the neutral rate should be a little higher. As the duo wrote: \u201cThe continued strength of the U.S. economy and ongoing inflation above the 2% target raises the prospect that the neutral rate may be higher than many at the Fed previously believed. This could be a topic that the Chair addresses in his press conference.\u201d<\/p>\n<h2 class=\"wp-block-heading\">Consensus view<\/h2>\n<p>More widely, analysts are expecting the base rate to track downwards this year. Goldman Sachs\u2019 David Mericle, for example, wrote to clients this week that he had pencilled in a 25bps cut in June, followed by a final cut in September to 3-3.25%.<\/p>\n<p>He caveated: \u201cFurther cuts will be less urgent if the labor market stabilizes, as we expect, and it will likely take a while for inflation to fall enough to create a strong consensus on the\u00a0FOMC\u00a0to cut again.\u201d <\/p>\n<p>Meanwhile over at <a aria-label=\"Go to https:\/\/fortune.com\/company\/bank-of-america-corp\/\" target=\"_blank\" href=\"https:\/\/fortune.com\/company\/bank-of-america-corp\/\">Bank of America<\/a>, analysts Mark Cabana, Aditya Bhave and Alex Cohen wrote that while Powell was likely to return to his \u201cwait and see\u201d approach, they didn\u2019t see that resulting in a hike down the line. <\/p>\n<p>\u201cThe labor market is soft and inflation is elevated. Both are stable, so the balance of risks has\u00a0not changed,\u201d they noted. \u201cWith policy now much closer to the Fed\u2019s assessment of neutral, there is no hurry to act. Especially because the economy is about to get hit with a large dose of fiscal stimulus.\u201d <\/p>\n<p>On a hike\u2014either in relation to inflation spiking or the labor market picking up\u2014they added this would be the \u201cbiggest surprise,\u201d adding: \u201cWe doubt the FOMC seeks that optionality at present.\u201d <\/p>\n<\/div>\n<div class=\"not-prose empty:contents [:has(*[data-empty=true])]:hidden\">\n<div class=\"typography-level-4 mt-4 font-graphik-compact [&amp;_*_a]:hover:underline\" data-cy=\"subscriptionPlea\"><span class=\"description-parser contents\"><strong>Join us at the Fortune Workplace Innovation Summit <\/strong>May 19\u201320, 2026, in Atlanta. The next era of workplace innovation is here\u2014and the old playbook is being rewritten. At this exclusive, high-energy event, the world\u2019s most innovative leaders will convene to explore how AI, humanity, and strategy converge to redefine, again, the future of work. <a href=\"https:\/\/conferences.fortune.com\/event\/workplace-innovation-2026\/HOME\">Register now<\/a>.<\/span><\/div>\n<\/div>\n<\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>Here we go again. It\u2019s Federal Open Market Committee (FOMC) meeting week, and Chairman Jerome Powell is likely to once again disappoint the White House by announcing a hold to the base interest rate. How fierce the reaction from the Oval Office will be is anyone\u2019s guess, but markets are fairly convinced that the two-day [&hellip;]<\/p>\n","protected":false},"author":367,"featured_media":17812,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[123],"tags":[],"class_list":["post-17811","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Don\u2019t hold your breath for a Fed rate cut any time soon. 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In fact, some say a hike could be on the cards | Unlock Informed Choices with Us\" \/>\n<meta property=\"og:description\" content=\"&quot;Underpinning this is our belief that the labor market is improving, and that unemployment will decline ahead on a trend basis,&quot; wrote the Macquarie economists.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/topat10.com\/?p=17811\" \/>\n<meta property=\"og:site_name\" content=\"Unlock Informed Choices with Us\" \/>\n<meta property=\"article:published_time\" content=\"2026-01-27T12:50:48+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/topat10.com\/wp-content\/uploads\/2026\/01\/GettyImages-2256116902-e1769512917896.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2048\" \/>\n\t<meta property=\"og:image:height\" content=\"1365\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Eleanor Pringle\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Eleanor Pringle\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/topat10.com\\\/?p=17811#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/topat10.com\\\/?p=17811\"},\"author\":{\"name\":\"Eleanor Pringle\",\"@id\":\"https:\\\/\\\/topat10.com\\\/#\\\/schema\\\/person\\\/6ade084e7415268476ee922c03a3d9b8\"},\"headline\":\"Don\u2019t hold your breath for a Fed rate cut any time soon. 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Pringle","author_link":"https:\/\/topat10.com\/?author=367"},"uagb_comment_info":0,"uagb_excerpt":"Here we go again. It\u2019s Federal Open Market Committee (FOMC) meeting week, and Chairman Jerome Powell is likely to once again disappoint the White House by announcing a hold to the base interest rate. How fierce the reaction from the Oval Office will be is anyone\u2019s guess, but markets are fairly convinced that the two-day&hellip;","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/topat10.com\/index.php?rest_route=\/wp\/v2\/posts\/17811","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/topat10.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/topat10.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/topat10.com\/index.php?rest_route=\/wp\/v2\/users\/367"}],"replies":[{"embeddable":true,"href":"https:\/\/topat10.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=17811"}],"version-history":[{"count":0,"href":"https:\/\/topat10.com\/index.php?rest_route=\/wp\/v2\/posts\/17811\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/topat10.com\/index.php?rest_route=\/wp\/v2\/media\/17812"}],"wp:attachment":[{"href":"https:\/\/topat10.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=17811"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/topat10.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=17811"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/topat10.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=17811"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}