Fed holds at 3.75-4.00%, signals patient stance ahead of tariff review
Market Closes
| Asset | Close | Change |
|---|---|---|
| S&P 500 (SPY) | 594.20 | +0.42% |
| Nasdaq 100 (QQQ) | 526.80 | +0.55% |
| 20Y+ Treasury (TLT) | 93.10 | -0.15% |
| DXY | 100.25 | +0.20% |
| Gold | 3245.00 | +0.18% |
| VIX | 17.25 | -1.85% |
What Happened
The January 28 2026 FOMC meeting held rates at 3.75-4.00% in a unanimous decision. The statement acknowledged "modest progress" on inflation while emphasizing that "tariff-related price pressures remain an ongoing consideration." Core PCE had printed 3.05% for December 2025, still above the 2% target but trending lower. Powell's press conference struck a patient tone, signaling the committee would await more data through the spring before adjusting policy.
Markets were calm, a testament to the well-telegraphed decision. The S&P 500 gained 0.42%, the dollar firmed modestly, and Treasuries were little changed. The session's main cross-asset theme was tech-led strength on continued AI capex resilience (SMH +1.1%, hyperscaler capex guidance reaffirmed). Bitcoin traded near $81,000, up 1% on the day.
The January 26 meeting set the stage for a spring evaluation period. Subsequent March 18 and April 29 meetings would hold, with the first cut of 2026 expected around mid-year pending data. The patient stance reflected the Fed's stated goal of getting rates to neutral (estimated 3.25-3.50%) gradually, with willingness to pause if tariff-driven inflation re-accelerated.
Lessons
- ·Unanimous holds with well-telegraphed decisions produce minimal market reaction
- ·Patient Fed stances allow cross-asset correlations to reset to fundamentals
- ·Post-shock regimes often require multiple quarters of data before policy adjusts
Related Scenarios
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