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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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In the previous budget, the Bharatiya Janata Party government announced plans to add 75,000 medical seats over five years and strengthen infrastructure at IITs established after 2014. For 2025, the Centre had earmarked Rs 1,28,650.05 crore for education, a 6.65 percent rise compared to the previous year.
Meanwhile, the Economic Survey 2025–26, tabled in the Parliament of India, points to persistent challenges in school education. While enrolment at the school level is close to universal, this has not translated into consistent learning outcomes, especially beyond elementary classes. The net enrolment rate drops sharply at the secondary level, standing at just over 52 per cent.
The survey also flags concerns over student retention after Class 8, particularly in rural areas. It notes an uneven spread of schools, with a majority offering only foundational and preparatory education, while far fewer institutions provide secondary-level schooling. This gap, the survey suggests, is a key reason behind low enrolment in higher classes.
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Budget 2026: Fiscal deficit, capex, borrowing and debt roadmap among key numbers to track – The Times of India
Finance Minister Nirmala Sitharaman is set to present her record ninth straight Union Budget, with markets closely tracking headline numbers ranging from the fiscal deficit and capital expenditure to borrowing and tax revenue projections, as India charts its course as the world’s fastest-growing major economy.The Budget will be presented in a paperless format, continuing the practice of recent years. Sitharaman had, in her maiden Budget in 2019, replaced the traditional leather briefcase with a red cloth–wrapped bahi-khata, marking a symbolic shift in presentation.Here are the key numbers and signals that investors, economists and policymakers will be watching in the Union Budget for 2025-26 and beyond:
Fiscal deficit
The fiscal deficit for the current financial year (FY26) is budgeted at 4.4 per cent of GDP, as reported PTI. With the government having achieved its consolidation goal of keeping the deficit below 4.5 per cent, attention will turn to guidance for FY27. Markets expect the government to indicate a deficit closer to 4 per cent of GDP next year, alongside clarity on the medium-term debt reduction path.
Capital expenditure
Capital spending remains a central pillar of the government’s growth strategy. Capex for FY26 is pegged at Rs 11.2 lakh crore. In the upcoming Budget, the government is expected to continue prioritising infrastructure outlays, with a possible 10–15 per cent increase that could take capex beyond Rs 12 lakh crore, especially as private investment sentiment remains cautious.
Debt roadmap
In her previous Budget speech, the finance minister had said fiscal policy from 2026-27 onwards would aim to keep central government debt on a declining trajectory as a share of GDP. Markets will look for a clearer timeline on when general government debt-to-GDP could move towards the 60 per cent target. General government debt stood at about 85 per cent of GDP in 2024, including central government debt of around 57 per cent.
Borrowing programme
Gross market borrowing for FY26 is estimated at Rs 14.80 lakh crore. The borrowing number announced in the Budget will be closely scrutinised, as it signals the government’s funding needs, fiscal discipline and potential impact on bond yields.
Tax revenue
Gross tax revenue for 2025-26 has been estimated at Rs 42.70 lakh crore, implying an 11 per cent growth over FY25. This includes Rs 25.20 lakh crore from direct taxes—personal income tax and corporate tax—and Rs 17.5 lakh crore from indirect taxes such as customs, excise duty and GST.
GST collections
Goods and Services Tax collections for FY26 are projected to rise 11 per cent to Rs 11.78 lakh crore. Projections for FY27 will be keenly watched, especially as GST revenue growth is expected to gather pace following rate rationalisation measures implemented since September 2025.
Nominal GDP growth
Nominal GDP growth for FY26 was initially estimated at 10.1 per cent but has since been revised down to about 8 per cent due to lower-than-expected inflation, even as real GDP growth is pegged at 7.4 per cent by the National Statistics Office. The FY27 nominal GDP assumption—likely in the 10.5–11 per cent range—will offer clues on the government’s inflation and growth outlook.
Spending priorities
Beyond the headline aggregates, the Budget will also be scanned for allocations to key social and development schemes, as well as spending on priority sectors such as health and education.Together, these numbers will shape expectations on fiscal discipline, growth momentum and policy support as India navigates a complex global economic environment.
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