Jerome Powell, chairman of the US Federal Reserve, speaks during a news conference following a Federal Open Market Committee (FOMC) meeting in Washington, DC, US, on Wednesday, Jan. 28, 2026. Kent Nishimura | Bloomberg | Getty ImagesThe Federal Reserve has little choice but to stay on the sidelines this week as it navigates a mix of complicated and conflicting forces playing out in the U.S. economy.Markets are pricing in a near-zero chance that the rate-setting Federal Open Market Committee will be cutting at this meeting — or any other in the near future. In fact, futures pricing suggests policymakers won’t consider easing until at least September, more likely October, and even then just a single cut this year.For Wednesday’s decision, Chair Jerome Powell and his colleagues have to wrestle with the Iraq war, fears of an inflation spike and mixed signals from the labor market. The combination of factors all but assures the Fed will stand pat, keeping its key interest rate targeted between 3.5%-3.75%. Updates to economic and rate projections also aren’t expected to show major changes.”The decision itself is almost guaranteed – a rate hold at the March meeting. But any hints Chair Powell might drop about the path of future interest rates will be key,” said BeiChen Lin, senior investment strategist at Russell Investments. “Broadly speaking, the U.S. economy is still on solid footing. This means however that the bar for further rate cuts in the U.S. may be quite elevated.”Even before the war, traders weren’t expecting a cut at this week’s meeting. Instead, they expected the FOMC would wait until June, then cut at least once more before the end of the year, according to the CME Group’s FedWatch pricing. However, the attacks — and their impact on oil and inflation — have changed the market’s calculus, even though Fed officials generally look through the types of oil shocks that have accompanied the fighting.As such, all eyes will be on Powell’s messaging. If things go as planned, this will be Powell’s next-to-last meeting as chair, so ev …
