Fed Expected to Hold Rates at 3.5%–3.75% as Powell Faces DOJ Criminal Probe and Supreme Court Fight
Economists expect the Fed to hold the federal funds rate at 3.5%–3.75% at its Jan. 28, 2026 meeting (decision at 2 p.m. ET, Powell press conference at 2:30), pausing after three quarter‑point cuts in late 2025 as inflation remains above 2% and the labor market weakens amid internal FOMC division over further easing. Chair Jerome Powell is simultaneously facing a DOJ probe into the Fed’s headquarters renovation and a Supreme Court fight over Lisa Cook’s removal as political pressure mounts ahead of a May succession decision, but former officials say those developments are unlikely to alter the Fed’s economic deliberations and may even bolster support for Fed independence.
📌 Key Facts
- Economists polled by FactSet expect the FOMC to hold the federal funds rate at 3.5%–3.75% (about 3.6%) at the Jan. 28, 2026 meeting, after three consecutive quarter-point cuts in late 2025; the Fed is described as “well positioned to wait.”
- The Fed will announce its rate decision at 2:00 p.m. ET on Jan. 28, followed by Chair Jerome Powell’s live news conference at 2:30 p.m. ET, expected to last roughly 45 minutes.
- Officials are likely pausing further cuts because of a weakening labor market and inflation that remains above the Fed’s 2% target; economists generally expect any additional cuts to come later in the year, around June or afterward.
- For consumers, borrowing costs have eased since last year’s cuts, and many loan rates are at multi‑year lows, but a single 25‑basis‑point move would have limited immediate effect and affordability remains strained.
- A DOJ criminal probe into Powell’s handling of the Fed’s headquarters renovation and a separate Supreme Court battle over the removal of Fed Governor Lisa Cook are unfolding as President Trump prepares to name Powell’s successor when his term expires in May.
- Former Fed staffers Claudia Sahm and Michael Gapen say the DOJ investigation and political attacks are unlikely to change how the FOMC conducts its internal economic deliberations.
- There is visible internal division at the Fed: in December only 12 of 19 FOMC participants backed at least one more cut this year, underscoring disagreement over further easing.
- Powell’s public role has narrowed amid political pressure—he has given just one speech touching the economy since September—while some analysts say recent DOJ subpoenas and Supreme Court signals may have increased Senate support for Fed independence.
📰 Source Timeline (4)
Follow how coverage of this story developed over time
January 28, 2026
5:17 AM
Federal Reserve may keep rates unchanged for months as economy shows signs of health
New information:
- Confirms that after three cuts last year, Fed officials are again expected to leave their short‑term rate unchanged at this week’s meeting.
- Adds detail that only 12 of 19 FOMC participants in December backed at least one more cut this year, underscoring internal division over further easing.
- Notes economists’ consensus that any additional cuts are likely to come later in the year, around June or afterward.
- Reports Powell has given just one speech touching on the economy since September, and cites former Fed officials saying his public role has visibly shrunk amid political pressure.
- Quotes former New York Fed and BNY/ Guggenheim analysts saying the recent DOJ subpoenas and Supreme Court signals may actually have strengthened Senate support for Fed independence.
January 27, 2026
11:03 PM
WATCH LIVE: Fed chair Powell holds news conference on interest rate decision
New information:
- Confirms Powell will hold a live news conference on Wednesday, Jan. 28, 2026 at 2:30 p.m. ET following the FOMC decision.
- Restates that the committee is 'almost certain' to keep the policy rate unchanged around 3.6% after three quarter‑point cuts in late 2025, emphasizing the Fed’s "well positioned to wait" stance.
- Adds fresh on‑record assessments from former Fed staffers Claudia Sahm and Michael Gapen that the DOJ and political attacks will not change how the FOMC conducts its internal economic deliberations.
4:57 PM
Here's what to expect at the Fed's first interest rate meeting of 2026
New information:
- Economists polled by FactSet expect the FOMC to hold the federal funds rate at 3.5%–3.75% at its January 28, 2026 meeting, after three consecutive cuts in late 2025.
- CBS specifies the announcement schedule: rate decision at 2 p.m. ET on January 28 followed by a 2:30 p.m. Powell press conference expected to last about 45 minutes.
- The article ties current Fed deliberations to a weakening labor market and inflation still above the 2% target, framing why officials are likely to pause cuts.
- It reiterates that the DOJ probe into Powell’s handling of the Fed’s headquarters renovation and the Supreme Court case over Lisa Cook’s removal are unfolding just as Trump prepares to name Powell’s successor when his term expires in May.
- Consumer context: borrowing costs have already eased somewhat since last year’s cuts, but a single 0.25‑point move would have limited immediate effect; analysts note rates on many loans are at multi‑year lows even as affordability remains strained.
January 17, 2026