January Fed meeting: dates and what to expect

• The Federal Open Market Committee (FOMC) kept rates steady during its last meeting in December 2024 and signalled several rate cuts throughout 2024.
• On the eve of the next FOMC meeting, as many as three Fed representatives advocated for maintaining steady interest rates.
• Markets still see rates unchanged in January and predict a 48% probability of a rate cut at the next meeting in March. If Fed Chairman Jerome Powell signals a possible rate cut in March, the USD will likely weaken against all major currencies.

At the last FOMC meeting held on 17–18 December 2023, interest rates remained unchanged at 5.25%–5.50%. The quarterly released Summary of Economic Projections backed the December decision. According to the published data for 2024, GDP growth will move from 1.5% to 1.4%, unemployment will remain unchanged at 4.1%, and PCE inflation will decline from 2.5% to 2.4%. Based on this, FOMC members voted to change the key rate, which was reflected in the Fed's dot plot. For 2024, the Fed's median target rate is now 4.6% vs. 5.1% in June—down 0.50 basis points.

On the eve of the next FOMC meeting on 30–31 January 2024, as many as three Fed representatives expressed their opinion. They made it clear that they have not yet seen evidence to start easing monetary policy: 

• San Francisco Fed President Mary Daly said during her Friday interview on Fox Business: ‘Neither unemployment nor inflation makes me think that an adjustment is necessary.’

• Atlanta Fed President Raphael Bostic still anticipates the first rate cut won't be until the third quarter.

• Chicago Fed President Austan Goolsbee also emphasises the importance of getting more relevant data. 

The policymakers spoke just hours before the Fed's traditional pre-meeting communications blackout period. The market expected the Fed to keep rates steady at a target of 5.25%–5.50%.

‘Based on information from official sources, it looks like the rate will remain unchanged in January,’ said Kar Yong Ang, Octa's financial market analyst. ‘The Fed may start cutting rates in the spring, assuming they have enough data to be confident that inflation has been beaten,’ he added.

Markets still see rates unchanged in January and predict a 48% probability of a rate cut at the next meeting in March, according to the CME FedWatch Tool. Traders should focus most of their attention on the rhetoric accompanying the decision. If Fed Chairman Jerome Powell signals a possible rate cut in March, the USD will likely weaken against all major currencies. USDJPY may decline to the 140.00–142.00 range by the end of this trading week.