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Fed Sets First 2026 Rate Call as Crypto Watches Powell’s Next Move
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The Federal Reserve is set to announce its interest-rate decision for January 28, 2026, with a 97% chance of holding rates steady at 3.50%-3.75%. Analysts expect Powell's commentary to influence crypto market volatility, as previous rate cuts have led to increased liquidity for digital assets. Traders will monitor signals regarding future monetary policy and its impact on risk appetite for cryptocurrencies like Bitcoin and Ethereum.
The Federal Reserve is set to announce its first interest-rate decision of 2026 on Wednesday, Jan. 28, concluding a two-day meeting of the Federal Open Market Committee (FOMC). The policy statement is scheduled for 2 p.m. ET, followed by a press briefing from Fed Chair Jerome Powell at 2:30 p.m. ET. Markets currently price in about a 97% chance the Fed holds rates unchanged in the 3.50%–3.75% range.
The central bank’s decision comes after three consecutive rate cuts in late 2025. Economists and traders widely expect the FOMC to pause further reductions this week, a response to persistent inflation and a strengthening labor market. While inflation has eased from previous peaks, it remains above the Fed’s 2% target, limiting room for aggressive easing.
In Washington, political pressure is mounting ahead of the announcement. President Donald Trump, who has publicly criticized Powell’s approach to monetary policy, has indicated he intends to name a successor to the Fed chair ahead of Powell’s term expiration in May. Trump also suggested that interest rates could fall under new leadership.
Crypto Markets Brace for Macro Signals
Cryptocurrency traders entered the week in cautious positions as the Fed meeting approached. Bitcoin, Ethereum and other major tokens traded in tight ranges with volatility subdued ahead of the policy statement. Analysts note that Powell’s commentary on future monetary policy: not just the rate level is expected to drive price swings once the Fed releases its outlook.
Digital assets have historically reacted to shifts in U.S. monetary policy. When the Fed last cut rates, crypto markets showed price strength as liquidity increased. A pause in cuts, instead of additional easing, could reduce speculative demand for high-beta assets like Bitcoin and Ethereum if investor risk appetite wanes.
Liquidity conditions also play a central role. Traders will closely track language in the FOMC statement regarding inflation and employment trends, as well as any hints about future rate paths. In past cycles, clearer guidance from the Fed has correlated with sharp moves in crypto markets, particularly when markets adjust to expectations for real yields or tighter dollar liquidity.
Historical Context and Broader Implications
The federal funds rate has fluctuated widely over recent years, peaking above 5% in 2023 before stepping down into the current range late last year. This dynamic has shaped borrowing costs across the economy, from mortgages to business investment.
Stablecoins and other regulated crypto products have also reacted to U.S. policy shifts. Legislation in 2025 increased banks’ ability to issue stablecoins, tying demand for those tokens to Treasury yields and the broader monetary environment.
Investors in both traditional finance and digital assets are watching Powell’s remarks closely. The central bank’s guidance may set the tone for markets well beyond Wednesday’s announcement, influencing liquidity, risk sentiment and asset allocation decisions throughout the year.
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Fed Sets First 2026 Rate Call as Crypto Watches Powell’s Next Move
Share:
The Federal Reserve is set to announce its interest-rate decision for January 28, 2026, with a 97% chance of holding rates steady at 3.50%-3.75%. Analysts expect Powell's commentary to influence crypto market volatility, as previous rate cuts have led to increased liquidity for digital assets. Traders will monitor signals regarding future monetary policy and its impact on risk appetite for cryptocurrencies like Bitcoin and Ethereum.
The Federal Reserve is set to announce its first interest-rate decision of 2026 on Wednesday, Jan. 28, concluding a two-day meeting of the Federal Open Market Committee (FOMC). The policy statement is scheduled for 2 p.m. ET, followed by a press briefing from Fed Chair Jerome Powell at 2:30 p.m. ET. Markets currently price in about a 97% chance the Fed holds rates unchanged in the 3.50%–3.75% range.
The central bank’s decision comes after three consecutive rate cuts in late 2025. Economists and traders widely expect the FOMC to pause further reductions this week, a response to persistent inflation and a strengthening labor market. While inflation has eased from previous peaks, it remains above the Fed’s 2% target, limiting room for aggressive easing.
In Washington, political pressure is mounting ahead of the announcement. President Donald Trump, who has publicly criticized Powell’s approach to monetary policy, has indicated he intends to name a successor to the Fed chair ahead of Powell’s term expiration in May. Trump also suggested that interest rates could fall under new leadership.
Crypto Markets Brace for Macro Signals
Cryptocurrency traders entered the week in cautious positions as the Fed meeting approached. Bitcoin, Ethereum and other major tokens traded in tight ranges with volatility subdued ahead of the policy statement. Analysts note that Powell’s commentary on future monetary policy: not just the rate level is expected to drive price swings once the Fed releases its outlook.
Digital assets have historically reacted to shifts in U.S. monetary policy. When the Fed last cut rates, crypto markets showed price strength as liquidity increased. A pause in cuts, instead of additional easing, could reduce speculative demand for high-beta assets like Bitcoin and Ethereum if investor risk appetite wanes.
Liquidity conditions also play a central role. Traders will closely track language in the FOMC statement regarding inflation and employment trends, as well as any hints about future rate paths. In past cycles, clearer guidance from the Fed has correlated with sharp moves in crypto markets, particularly when markets adjust to expectations for real yields or tighter dollar liquidity.
Historical Context and Broader Implications
The federal funds rate has fluctuated widely over recent years, peaking above 5% in 2023 before stepping down into the current range late last year. This dynamic has shaped borrowing costs across the economy, from mortgages to business investment.
Stablecoins and other regulated crypto products have also reacted to U.S. policy shifts. Legislation in 2025 increased banks’ ability to issue stablecoins, tying demand for those tokens to Treasury yields and the broader monetary environment.
Investors in both traditional finance and digital assets are watching Powell’s remarks closely. The central bank’s guidance may set the tone for markets well beyond Wednesday’s announcement, influencing liquidity, risk sentiment and asset allocation decisions throughout the year.
In This News
Share:
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Share:
Read More
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