Fed January Decision Landed: Benchmark Interest Rate Unchanged, Policy Could Be Relaxed if Tariff Inflation Peaks and Then Falls

**Fed Holds Rates Steady in 2026 First Decision; Gold, Silver Extend Gains** Beijing time, January 29 at 3:00 am — The Federal Reserve announced its first interest rate decision of 2026 early Wednesday: it will keep the benchmark federal funds rate unchanged at 3.50%-3.75%, pausing three consecutive rate cuts since September 2025. The move aligns with market expectations. Goldman Sachs analyst Kay Hayes noted that strong economic data and signs of labor market stabilization likely led the Fed to hold policy steady temporarily. “We expect rate cuts to resume later this year,” Hayes said. “Slowing inflation will allow the Fed to cut twice more as part of its normalization process, bringing rates back to the neutral level FOMC members view as appropriate.” Fed Chair Jerome Powell said in post-decision remarks that the unemployment rate has shown modest stabilization, inflation remains slightly above the Fed’s 2% target, and the labor market may be stabilizing after a gradual softening. “If tariff-driven inflation peaks and falls this year, it would signal room for policy easing,” Powell added. “Rate hikes are not anyone’s base case, and no one expects a hike at the next meeting.” When asked about the Fed’s response to a Department of Justice (DOJ) subpoena, Powell declined to elaborate. On the topic of his potential reappointment as Fed Chair, Powell remained tight-lipped: “Stay away from electoral politics. Don’t get involved. Don’t do it,” he told reporters during the routine press conference. Following the decision, gold and silver extended prior gains: spot gold approached $5,600 this morning, up nearly $600 for the week; spot silver broke above $119 per ounce, rising 1.91% intraday.