{"id":10830,"date":"2026-01-29T12:03:46","date_gmt":"2026-01-29T17:03:46","guid":{"rendered":"https:\/\/www.guardiancapital.com/investmentsolutions\/?post_type=insight&p=10830"},"modified":"2026-01-30T12:05:21","modified_gmt":"2026-01-30T17:05:21","slug":"viewpoint-fed-decision-january-2026","status":"publish","type":"insight","link":"https:\/\/www.guardiancapital.com/investmentsolutions\/insights\/viewpoint-fed-decision-january-2026\/","title":{"rendered":"Viewpoint: The Fed decision — hitting pause to start the new year"},"content":{"rendered":"

The Fed decision — hitting pause to start the new year<\/strong><\/p>\n

The U.S. Federal Reserve (Fed) Federal Open Market Committee (FOMC) decided to leave the policy rate unchanged for the first time in four meetings. While the steady decision was universally expected by markets and forecasters alike, resulting in negligible market response, there was dissension among the (new slate<\/a>1<\/sup>) of voters for the fifth straight meeting (the longest streak since 2013 as per data compiled by the St. Louis Fed<\/a>2<\/sup>), with Governors Christopher Waller and Stephen Miran preferring to cut rates by a further 25 basis points today (January 28, 2026).<\/p>\n

Both Miran and Waller (who are under consideration for the Fed Chair role after Powell\u2019s term ends in May) have been on record expressing their concerns about the underlying strength of American labour markets; however, it appears that the other members of the FOMC are feeling less worried.<\/p>\n

Specifically, the statement<\/a>3<\/sup> accompanying today\u2019s policy announcement (which reflects the consensus views of the group), the text is provided below with the additions<\/span> and deletions<\/span><\/del> versus December<\/a>4<\/sup> highlighted by me) dropped the assessment that \u201cdownside risks to employment rose in recent months\u201d, which had served as a key rationale for previous cuts, while it was noted that the unemployment rate has \u201cshown signs of stabilization\u201d rather than having \u201cedged up\u201d even as job gains \u201cremained low.\u201d The \u201cdecision by Committee\u201d approach to policy-setting emphasizes the challenge that Fed Chair Powell\u2019s presidentially appointed successor will face in pushing a more dovish tilt to deliberations.<\/p>\n

Elsewhere in the statement, economic momentum was upgraded (activity has been expanding at a \u201csolid\u201d pace rather than a \u201cmoderate\u201d one), while lip service was paid to the recent downside surprises in consumer price data with the removal of the comment that inflation \u201chas moved up since earlier in the year\u201d though it does remain \u201csomewhat elevated.\u201d<\/p>\n

From my lens, today\u2019s decision, its broad support from the new FOMC voters who had the opportunity to join the dissents, and the post-meeting communication (including the reiteration from Powell in his post-meeting press conference, that rates are \u201cwithin range of plausible estimates of neutral\u201d) suggest that the Fed is moving to the sidelines for at least the final two meetings of Jerome Powell\u2019s term rather than simply skipping one following three consecutive rate cuts. The direction thereafter will depend on how the dataflow progresses and how persuasive the Fed\u2019s new leadership can be (for what it is worth, the market is still pricing just under 50 basis points worth of cuts over the second half of this year).<\/p>\n

 <\/p>\n

_____________
\nDavid Onyett-Jeffries<\/strong>
\nDavid Onyett-Jeffries is Vice President, Economics & Multi Asset Solutions, at Guardian Capital LP (GCLP). He provides macroeconomic guidance to GCLP and its affiliates. Additionally, he is a portfolio manager of GCLP’s multi-asset portfolios and funds and works closely with GCLP\u2019s Directed Outcomes team.<\/em><\/p>\n

 <\/p>\n

December 10, 2025<\/span><\/del> January 28, 2026<\/span><\/p>\n

Federal Reserve issues FOMC statement<\/strong><\/p>\n

For release at 2:00 p.m. EST<\/p>\n

Available indicators suggest that economic activity has been expanding at a moderate<\/span><\/del> solid<\/span> pace. Job gains have slowed this year<\/span><\/del> remained low<\/span>, and the unemployment rate has edged up through September<\/span><\/del> shown signs of stabilization<\/span>. More recent indicators are consistent with these developments.<\/span><\/del> Inflation has moved up since earlier in the year and<\/span><\/del> remains somewhat elevated.<\/p>\n

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months<\/span><\/del>.<\/p>\n

In support of its goals and in light of the shift in the balance of risks<\/span><\/del>, the Committee decided to lower<\/span><\/del> maintain<\/span> the target range for the federal funds rate by 1\/4 percentage point to<\/span><\/del> at<\/span> 3-1\/2 to 3-3\/4 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.<\/p>\n

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.<\/p>\n

The Committee judges that reserve balances have declined to ample levels and will initiate purchases of shorter-term Treasury securities as needed to maintain an ample supply of reserves on an ongoing basis.<\/span><\/del><\/p>\n

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins<\/span>;<\/span><\/del> Lisa D. Cook; Beth M. Hammack<\/span>; Philip N. Jefferson; Neel Kashkari; Lorie K. Logan; and Anna Paulson<\/span> Alberto G. Musalem; and Christopher J. Waller<\/span><\/del>. Voting against this action were Stephen I. Miran and Christopher J. Waller<\/span>, who preferred to lower the target range for the federal funds rate by 1\/2<\/span><\/del> 1\/4<\/span> percentage point at this meeting; <\/span>and Austan D. Goolsbee and Jeffrey R. Schmid, who preferred no change to the target range for the federal funds rate at this meeting<\/span><\/del>.<\/p>\n

Fed Funds Rate target midpoint<\/strong>
\n(percent)<\/p>\n

\"Fed<\/p>\n

Shaded regions represent periods of U.S. recession; source: Guardian Capital, based on data from the Federal Reserve as at January 28, 2026<\/em><\/p>\n

Fed funds rate target midpoint and expectations<\/strong>
\n(percent)<\/p>\n

\"Fed<\/p>\n

Source: Guardian Capital, based on data from the U.S. Federal Reserve and Bloomberg to January 28, 2026<\/em><\/p>\n

FOMC statement word count*<\/strong>
\n(number)<\/p>\n

\"FOMC<\/p>\n

*Includes only the body text, not voting nor supplementary materials; source: Guardian Capital, based on data from the U.S. Federal Reserve to January 28, 2026<\/em><\/p>\n

1<\/sup> Board of Governors of the Federal Reserve, Monetary Policy, Federal Open Market Committee, January 28, 2026, https:\/\/www.federalreserve.gov\/monetarypolicy\/fomc.htm<\/a>
\n2<\/sup> Federal Reserve Bank of St. Louis, FOMC Dissent Data Appendix to “Making Sense of Dissents: A History of FOMC Dissents.” Federal Reserve Bank of St. Louis Review, Third Quarter 2014 Vol. 96, No. 3, January 28, 2026, https:\/\/www.stlouisfed.org\/-\/media\/project\/frbstl\/stlouisfed\/files\/excel\/fomc_dissents_data.xlsx<\/a>
\n3<\/sup> Board of Governors of the Federal Reserve, News & Events, Press Release, Federal Reserve issues FOMC statement, January 28, 2026, https:\/\/www.federalreserve.gov\/newsevents\/pressreleases\/monetary20260128a.htm<\/a>
\n4<\/sup> Board of Governors of the Federal Reserve, News & Events, Press Release, Federal Reserve issues FOMC statement, December 10, 2025, https:\/\/www.federalreserve.gov\/newsevents\/pressreleases\/monetary20251210a.htm<\/a><\/p>\n

This commentary is for general informational purposes only and does not constitute investment, financial, legal, accounting, tax advice or a recommendation to buy, sell or hold a security. It shall under no circumstances be considered an offer or solicitation to deal in any product or security mentioned herein. It is only intended for the audience to whom it has been distributed and may not be reproduced or redistributed without the consent of Guardian Capital LP. This information is not intended for distribution into any jurisdiction where such distribution is restricted by law or regulation.<\/strong><\/p>\n

The opinions expressed are as of the date of publication and are subject to change without notice. Assumptions, opinions and estimates are provided for illustrative purposes only and are subject to significant limitations. Reliance upon this information is at the sole discretion of the reader. This document includes information concerning financial markets that were developed at a particular point in time. This information is subject to change at any time, without notice, and without update. This commentary may also include forward-looking statements concerning anticipated results, circumstances, and expectations regarding future events. Forward-looking statements require assumptions to be made and are, therefore, subject to inherent risks and uncertainties. There is significant risk that predictions and other forward-looking statements will not prove to be accurate. Investing involves risk. Equity markets are volatile and will increase and decrease in response to economic, political, regulatory and other developments. Investments in foreign securities involve certain risks that differ from the risks of investing in domestic securities. Adverse political, economic, social or other conditions in a foreign country may make the stocks of that country difficult or impossible to sell. It is more difficult to obtain reliable information about some foreign securities. The costs of investing in some foreign markets may be higher than investing in domestic markets. Investments in foreign securities are also subject to currency fluctuations. The risks and potential rewards are usually greater for small companies and companies located in emerging markets. Bond markets and fixed-income securities are sensitive to interest rate movements. Inflation, credit and default risks are all associated with fixed-income securities. Diversification may not protect against market risk and loss of principal may result. Index returns are for information purposes only and do not represent actual strategy or fund performance. Index performance returns do not reflect the impact of management fees, transaction costs or expenses. Certain information contained in this document has been obtained from external parties, which we believe to be reliable; however, we cannot guarantee its accuracy.<\/p>\n

Guardian Capital LP manages portfolios for defined benefit and defined contribution pension plans, insurance companies, foundations, endowments and investment funds. Guardian Capital LP is a wholly owned subsidiary of Guardian Capital Group Limited, a publicly traded firm listed on the Toronto Stock Exchange. For further information on Guardian Capital LP, please visit www.guardiancapital.com<\/a>. All trademarks, registered and unregistered, are owned by Guardian Capital Group Limited and are used under license.<\/p>\n

Published: January 29, 2025<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

The U.S. Federal Reserve (Fed) Federal Open Market Committee (FOMC) decided to leave the policy rate unchanged for the first time in four meetings. While the steady decision was universally expected by markets and forecasters alike, resulting in negligible market response, there was dissension among the (new slate) of voters …<\/p>\n","protected":false},"comment_status":"closed","ping_status":"closed","template":"","insight_tags":[155],"class_list":["post-10830","insight","type-insight","status-publish","hentry","insight_category-insights","insight_tags-market-insights"],"acf":[],"lang":"en","translations":{"en":10830},"pll_sync_post":[],"_links":{"self":[{"href":"https:\/\/www.guardiancapital.com/investmentsolutions\/wp-json\/wp\/v2\/insight\/10830","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.guardiancapital.com/investmentsolutions\/wp-json\/wp\/v2\/insight"}],"about":[{"href":"https:\/\/www.guardiancapital.com/investmentsolutions\/wp-json\/wp\/v2\/types\/insight"}],"replies":[{"embeddable":true,"href":"https:\/\/www.guardiancapital.com/investmentsolutions\/wp-json\/wp\/v2\/comments?post=10830"}],"wp:attachment":[{"href":"https:\/\/www.guardiancapital.com/investmentsolutions\/wp-json\/wp\/v2\/media?parent=10830"}],"wp:term":[{"taxonomy":"insight_tags","embeddable":true,"href":"https:\/\/www.guardiancapital.com/investmentsolutions\/wp-json\/wp\/v2\/insight_tags?post=10830"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}