The Federal Reserve’s interest rate decisions impact borrowers and investors. Rates fell from 3.64% in December to 4.33% in June per the New York Federal Reserve. The Fed’s monetary policy plays a crucial role in shaping economic activity and corporate profits. Chairman Jerome Powell’s rate cuts in 2024 were followed by a pause in early 2025 due to inflation concerns. Inflation rose to 3% in September but lowered to 2.7% in October. Unemployment climbed to 4.6% in November. The Fed’s rate cuts in 2025 aimed to support the jobs market amidst tariff impact on inflation. The Fed’s hawkish tone in December hinted at fewer rate cuts in 2026, reducing expectations for a rate reduction in January. Inflation and unemployment data will influence the Fed’s decision at the January FOMC meeting. Goldman Sachs forecasts only two cuts in 2026, with the Fed potentially cutting rates by 50bp. Economic data releases in January will provide insights into the Fed’s next move.

Read more at Yahoo Finance: Fed interest rate cut bets shift for January