At 3:00 AM Beijing time on January 29th, the Federal Open Market Committee (FOMC) announced its latest interest rate decision, keeping the federal funds rate range unchanged at 3.50%-3.75%, ending three consecutive rate cuts since September 2025, which was in line with widespread market expectations. This decision marks the Fed’s official entry into a policy observation period, and subsequent adjustments will be highly dependent on economic data performance.
The decision was not unanimous. Two out of 12 voting committee members voted against it, namely Federal Reserve Governors Stephen Milan and Christopher Waller, both of whom favored a further 25-basis-point rate cut, highlighting the growing divergence within the Fed on the policy path. In its statement, the Fed upgraded its assessment of the U.S. economy, stating that the economy is expanding at a “steady” pace and that the unemployment rate has shown initial signs of stabilization, but inflation remains above the 2% long-term target, and economic prospects still face high uncertainty.
After the decision was announced, financial markets fluctuated significantly: the U.S. Dollar Index rose more than 1% intraday before narrowing its gains; the three major U.S. stock indexes remained stable, with the Dow Jones Industrial Average edging up 0.02%, the Nasdaq Composite Index rising 0.17%, and the S&P 500 Index slightly falling 0.01%. Storage chip concept stocks performed brightly, with Seagate Technology surging more than 19%. The precious metals market, however, erupted: spot gold soared 4.5% to stand above $5,400 per ounce, further breaking through the $5,500 mark in early trading today; spot silver rose 4.2% to $116.6 per ounce, and COMEX gold futures jumped 6.46%.
Federal Reserve Chairman Jerome Powell said at a press conference that a rate hike is not a basic assumption for anyone’s next move, and that further policy easing could be implemented if tariff inflation peaks and falls. He also suggested that the next Fed chairman stay away from politics to safeguard the central bank’s independence. Markets expect that before Powell’s term ends in May, there will be significant resistance to Fed rate cuts, and the probability of keeping rates unchanged in March is as high as 86.5%.
