Market Expectations for the Upcoming Federal Reserve Meeting

Following the recent interest rate cut by the U.S. Federal Reserve, all eyes are now on the upcoming meeting scheduled for January 28, 2026. Current predictions indicate that the central bank is likely to maintain the target rate at its current level.
In a recent press conference, Powell emphasized that while there is a consensus on the need to address high inflation and a softening labor market, the real debate lies in how to balance these risks. He noted that
some members feel we should stop here and that we re at the right place and just wait
Futures markets, particularly CME s Fedwatch Tool, show a strong leaning towards a no-change decision, with a 75.6 probability assigned to the Fed keeping the target rate steady. The likelihood of a rate cut stands at 24.4 , and expectations for a rate hike are virtually nonexistent.
Prediction markets also align with this outlook. On Kalshi, the probability for the Fed maintaining rates is priced at 79 , while a 25-basis-point cut trails at 22 . Similarly, Polymarket shows a 78 probability for a no change decision, with a 21 chance for a 25-basis-point decrease.