Fed Rate Decision January 2026: No Change as Inflation Persists
TLDR
- Federal Reserve held interest rates at 3.5%-3.75% Wednesday, pausing cuts for first time since July
- US dollar fell to four-year lows following its worst annual showing since 2017
- Stephen Miran and Chris Waller dissented, preferring a 25-basis-point rate reduction
- Bitcoin traded near $89,500 after the decision while gold climbed to $5,300 per ounce
- Probability of March rate cut stands at 16%, with April odds at 30%
The Federal Reserve kept interest rates steady on Wednesday at 3.5% to 3.75%. The Federal Open Market Committee voted to pause rate changes for the first time since July.
The decision matched market predictions. Traders had priced in a 99% probability of no rate movement before the meeting.
Fed officials cited ongoing inflation concerns. The policy statement highlighted low job gains and stabilizing unemployment. The central bank described inflation as “somewhat elevated.”
Two committee members broke from the majority. Stephen Miran, recently appointed by President Trump, voted for a quarter-point cut. Chris Waller also favored reducing rates by 25 basis points.
Bitcoin remained close to $89,500 following the announcement. Stock markets showed minimal reaction. Gold prices pushed higher, nearing record levels at $5,300 per ounce.
Currency Markets Show Weakness
The US dollar continued its downward trend this week. The Bloomberg Spot Dollar Index dropped to its lowest point in four years. The currency recorded its worst yearly performance since 2017.
President Trump has repeatedly called for lower interest rates. When asked about the dollar’s decline, he responded that “the value of the dollar is great.”
Market observers see strategy in the currency movement. The Kobeissi Letter called it evidence that “President Trump is willing to tolerate a weaker Dollar to push rates lower and boost US exports.”
David Ingles from Bloomberg TV APAC shared this view. He noted Trump may be “cutting rates on the Fed’s behalf by letting the dollar slide.”
Impact on Digital Assets
Cryptocurrency prices have fluctuated around Fed decisions. Traders are divided on how future policy changes will affect digital asset valuations.
Analysts identify a negative correlation between Bitcoin and the US Dollar Index. Stronger dollar values typically pressure cryptocurrencies lower. A declining dollar often supports risk assets.
Hong Kong-based platform OSL has documented this inverse relationship. Their research suggests dollar strength reflects shifts in investor risk appetite.
Julien Bittel from Global Macro Investor described a strong dollar as harmful to risk assets. He warned it can significantly tighten global financial conditions.
Rate cut expectations have changed substantially. November prediction markets showed 40% odds for a January cut. Those probabilities collapsed to zero by meeting time.
Future rate cut chances remain low. CME FedWatch shows 16% probability for a March reduction. The odds improve slightly to 30% for April.
Nick Ruck from LVRG Research analyzed the decision’s market effects. He explained the rate hold stems from inflation worries and economic stabilization. He warned this could trigger short-term volatility in cryptocurrency markets.
Jerome Powell held his press conference at 2:30 pm ET after the meeting. Market participants watched closely for signals about the Fed’s future approach.
The post Fed Rate Decision January 2026: No Change as Inflation Persists appeared first on Blockonomi.
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