Fed Rate Cut Pause Possible After 2025 Reductions

The Federal Reserve is unlikely to cut rates at the January 2026 FOMC meeting. Market data from CME suggests only a 5% probability, influenced by stable unemployment data and recent lower rate adjustments, suggesting room for a pause.

Fed contemplates a pause in rate cuts after reducing rates in December 2025, with January 2026 projections showing minimal likelihood of further reductions, impacting market expectations and cryptocurrency dynamics.

Guotai Haitong research highlights room for a pause in rate reductions despite earlier cuts in 2025. The Federal Reserve, led by Chair Jerome Powell, implemented three rate cuts in 2025, with possible pauses suggested for January 2026 FOMC meetings. Market reactions include adjustments in rate cut projections for mid‑2026, as identified in the FOMC minutes from December 2025. Job market improvements with unemployment at 4.4% contribute to revised market sentiments. Increased treasury yields and reduced expectations for near‑term cuts underscore these insights.

“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run.” — Jerome Powell, Chair, Federal Reserve.

The likely pause and revised rate cut schedule affect global liquidity, impacting cryptocurrencies. Historical trends indicate potential challenges for BTC and ETH under continued high-yield conditions.

Two cuts are now expected in 2026, influencing DeFi protocols and modern Layer 1 platforms. Powell’s term ending by May 2026 adds uncertainty, affecting future monetary policy directions.