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US Fed Holds Interest Rates Steady, Defies Trump Pressure For Cuts
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At its first policy meeting of the year, the US Federal Reserve left rates unchanged, pointing to solid growth, even as President Donald Trump renewed pressure for rate cuts.
US President Donald Trump and Federal Reserve Chair Jerome Powell speak during a tour of the Federal Reserve Board building, which is currently undergoing renovations, in Washington, DC, US. (IMAGE: REUTERS FILE)
The US Federal Reserve held interest rates steady Wednesday at its first policy gathering this year, citing robust economic growth, as the central bank resists President Donald Trump’s mounting pressure for cuts.
The Fed’s 10-2 vote maintains rates at a range between 3.50 percent and 3.75 percent, an outcome that was widely expected as officials await more data on the world’s biggest economy.
In a statement on its decision, policymakers flagged that economic activity has been “expanding at a solid pace,” while the unemployment rate showed some “signs of stabilization.”
But the Federal Open Market Committee saw two dissents.
Fed Governor Stephen Miran, alongside Christopher Waller — who is seen as a potential candidate to succeed chairman Jerome Powell — both backed a quarter-percentage-point rate cut instead.
The Fed has made quarter-point cuts at its last three policy meetings, as officials worried about the cooling jobs market. Miran, who was recently appointed by Trump, pushed for larger reductions each time.
But solid GDP growth, relatively low unemployment and stubborn inflation have provided reasons to pause, putting officials again at odds with Trump, who has repeatedly urged for lower interest rates.
Trump has sharply escalated pressure on the Fed since returning to the White House a year ago, taking steps that officials warn could threaten the bank’s independence from politics.
The president has been seeking to oust Fed Governor Lisa Cook over mortgage fraud allegations, while his administration launched an investigation into Powell over the bank’s headquarters renovation.
In a rare rebuke this month, Powell criticized the threat of criminal charges against him, saying this was about whether monetary policy would be “directed by political pressure or intimidation.”
Higher bar
“While the Fed has been politically pressured to cut rates, it is not pressed by the data,” said EY-Parthenon chief economist Gregory Daco.
Officials appear to have converged on a near-term halt in rate reductions, with their debate now centering around what conditions justify further cuts — and how quickly these should take place.
“The hurdle for additional near-term cuts has risen,” Daco said.
Officials will be looking for “clearer, more durable evidence of disinflation” or renewed deterioration in the labor market before lowering rates again, he added.
Recent weakness in the US dollar could cause further complications, making imported products more expensive for American consumers who are already hit by higher prices as Trump’s tariffs flow through supply chains.
Financial markets generally expect the Fed to continue keeping rates unchanged until its June meeting, according to CME FedWatch.
Looking ahead, all eyes are also on how Trump’s nominee to succeed Powell — whose chairmanship of the bank ends in May — shapes Fed policy.
“We think inflation peaks and starts to turn lower (this year) but also importantly, we think a new Fed chair would be more open to helping to navigate lower interest rates,” said Nationwide chief economist Kathy Bostjancic.
Credibility issues
One issue is whether the new chairman can corral the rest of the rate-setting committee into more cuts, ING analysts said.
Outside the Fed, it could be harder for the next chairman to convince investors that the bank will continue pursuing its mandate of low and stable inflation and maximum employment, independent of political influence, said Michael Strain of the conservative American Enterprise Institute.
Given the way the Trump administration has targeted Powell, Strain added that “establishing credibility will be much more challenging” for Powell’s successor than previous Fed chiefs over the last few decades.
Strain, who is AEI’s director of economic policy studies, also cautioned that the Fed may have gone too far in lowering rates last year.
He warned that the labor market might be stronger than officials think, while there remains a risk that inflation accelerates again.
“Certainly, the Fed should not continue to cut,” he said. “I’m worried the Fed’s going to have to hike in 2026.”
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – AFP)
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Washington D.C., United States of America (USA)
January 29, 2026, 00:50 IST
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The FTSE 100 closed higher on Monday, recouping most of Friday’s hefty falls amid a calmer bond market and as Iran responded to the latest US peace proposal.
The FTSE 100 closed up 128.38 points, 1.3%, at 10,323.75. The FTSE 250 ended up 15.56 points, 0.1%, at 22,611.70, but the AIM All-Share fell 8.72 points, 1.1%, at 800.17.
Iran said it had responded to a new US proposal aimed at ending the war, adding that diplomatic exchanges continue despite Iranian media reports describing Washington’s demands as excessive, AFP reported.
Washington and Tehran have been swapping proposals in an effort to end the conflict, which the US and Israel launched on February 28, but they have held only a single round of talks despite a fragile ceasefire.
“As we announced yesterday, our concerns were conveyed to the American side,” foreign ministry spokesman Esmaeil Baqaei told a news briefing, adding that exchanges were “continuing through the Pakistani mediator”.
Mr Baqaei defended Iran’s demands, including the release of Iranian assets frozen abroad and the lifting of long-standing sanctions.
“The points raised are Iranian demands that have been firmly defended by the Iranian negotiating team in every round of negotiations,” he said.
But with no signs of clear progress, the oil price remained inflated and volatile.
Brent crude for July delivery was trading at 110.80 dollars a barrel on Monday, up compared to 108.83 at the time of the equities close in London on Friday.
After a frantic Friday, the bond markets calmed, while sterling also rebounded as investors weighed the latest political developments.
The yield on UK 10-year gilts traded at 5.14% compared to 5.17% at the same time on Friday.
The pound traded at 1.3397 dollars on Monday afternoon, up from 1.3319 on Friday. Against the euro, sterling firmed to 1.1506 euros from 1.1462 on Friday.
Prime Minister Sir Keir Starmer insisted he would not set out a timetable to leave No 10 as potential leadership challenger Andy Burnham vowed to “change Labour” if he is successful in his effort to return to Parliament.
The Prime Minister said he still wants to lead Labour into the next general election amid calls from within the party to set out a timetable for his exit.
Greater Manchester Mayor Mr Burnham hopes to be Labour’s candidate in the Makerfield by-election, which could provide him with a route back to the Commons to challenge for the party leadership and the keys to Downing Street.
Speaking to broadcasters in London, Sir Keir said he was not going to set out a timetable to stand down if Mr Burnham returns to Westminster.
He added: “I do want to fight the next election. Obviously, I recognise that after the local election results, the elections in Wales and Scotland as well, that the first task is obviously turning things around and making sure that my focus is in the right place.”
Meanwhile, the International Monetary Fund said growth in the UK economy will be stronger this year than previously thought.
The IMF updated its growth projections a month after warning of a sharp slowdown caused by the global energy shock from the US-Iran war.
The influential financial body said it was now predicting UK gross domestic product to rise by 1% in 2026, higher than the 0.8% growth it was forecasting last month.
Responding to the latest report, Chancellor Rachel Reeves said: “The IMF upgrading its growth forecasts and backing our fiscal strategy is yet more proof that this Government has the right economic plan.”
In Europe, equity markets on Monday, the Cac 40 in Paris ended up 0.4%, and the Dax 40 in Frankfurt advanced 1.5%.
In New York, the Dow Jones Industrial Average was down 0.1%, the S&P 500 fell 0.4%, and the Nasdaq Composite was 0.7% lower.
On the FTSE 100, Whitbread closed up 2.3% after Corvex Management urged the Premier Inn owner to put itself up for sale, slamming its recently announced new five-year strategic plan.
In a damning letter to Whitbread management, the New York-based activist hedge fund called the status quo “untenable” and said that the need to pursue “meaningful strategic and structural reform had become unignorable”.
As a result, Corvex, which holds a stake of around 7% in Whitbread, said the only “credible” path to unlocking value at Whitbread is a sale of the company.
Anglo America fell 1.4% as it struck a deal to sell its portfolio of steelmaking coal mines in Australia to Dhilmar for up to 3.88 billion dollars in cash.
The London-based mining house said Dhilmar will pay the FTSE 100-listing 2.3 billion dollars upfront, and the deal has a price-linked earnout of up to 1.58 billion dollars.
Anglo American chief executive officer Duncan Wanblad said: “This agreement represents another major step in the simplification of our portfolio ahead of completing our merger with Teck. Through this transaction, we will complete our exit from steelmaking coal.”
Susannah Streeter, chief investment strategist at Wealth Club, said: “This not only strengthens the balance sheet, ahead of its planned merger with Canada’s Teck Resources, but also keeps it exposed to future strength in coal prices.”
Capita shares rose 8.9% as the London-based outsourcing and business services company said adjusted revenue rose 2.9% on-year in the first four months of 2026, which it said was in line with expectations.
Looking ahead, Capita said it continues to expect a low to mid-single digit revenue climb in Capita Public Service and expects mid-teen revenue growth in its Pension Solutions business.
The biggest risers on the FTSE 100 were Centrica, up 7.70p at 196.95p, National Grid, up 43.50p at 1,231.50p, Pearson, up 37.00p at 1,136.50p, Relx, up 81.00p at 2,504.00p, and SSE, up 74.00p at 2,345.00p.
The biggest fallers on the FTSE 100 were 3i Group, down 128.00p at 2,082.00p, Airtel Africa, down 15.60p at 312.80p, Mondi, down 16.40p at 734.60p, Polar Capital Technology Trust, down 12.50p at 659.00p and Diploma, down 95.00p at 6,625.00p.
Tuesday’s global economic calendar has UK consumer and wholesale inflation figures, eurozone inflation data and the minutes of the last Federal Open Market Committee meeting.
Tuesday’s local corporate calendar has full-year results from business services group DCC, half-year numbers from supplier of specialised technical products and services, Doploma, and electricals retailer Currys.
The Reserve Bank of India (RBI) on Monday decided against activating the countercyclical capital buffer (CCyB), indicating that current financial and credit conditions do not warrant an additional capital requirement for banks, PTI reported.The central bank said the decision followed a review and empirical assessment of indicators used under the CCyB framework.“Based on review and empirical analysis of CCyB indicators, it has been decided that it is not necessary to activate CCyB at this point in time,” RBI said in a statement.Under the RBI (Commercial Banks – Prudential Norms on Capital Adequacy) Directions, 2025, the CCyB framework is activated when financial conditions indicate rising systemic risks linked to excessive credit growth.The framework primarily relies on the credit-to-GDP gap as a key indicator, along with supplementary metrics.According to the RBI, the CCyB mechanism is intended to serve two broad objectives.Firstly, it requires a bank to build up a buffer of capital in good times, which may be used to maintain the flow of credit to the real sector in difficult times.Secondly, it achieves the broader macro-prudential goal of restricting the banking sector from indiscriminate lending in the periods of excess credit growth that have often been associated with the building up of system-wide risk.The framework was introduced globally after the 2008 financial crisis as part of measures proposed by the Group of Central Bank Governors and Heads of Supervision (GHOS) under the Basel framework to strengthen financial system resilience.
The company has announced plans to build seven new models in Europe including a small electric hatchback.
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