Federal Reserve Holds Steady on Interest Rates Amid Turmoil

Powell expected to defend central bank's independence at press conference

Jan. 27, 2026 at 11:39am

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The Federal Reserve is expected to keep interest rates unchanged at its first meeting of 2026, despite political pressure from the Trump administration to lower rates. The decision comes amid a Department of Justice investigation into Fed Chair Jerome Powell and a Supreme Court case over the firing of Fed Governor Lisa Cook. Powell will likely use the press conference to emphasize the Fed's independence from political influence.

Why it matters

The Fed's interest rate decisions have a significant impact on the economy, influencing borrowing costs for consumers and businesses. The political turmoil surrounding the central bank raises questions about its ability to make data-driven decisions free from White House pressure.

The details

Economists polled by FactSet expect the Fed to keep the federal funds rate in the 3.5% to 3.75% range, a pause after three consecutive rate cuts late last year. The meeting comes as the economy shows signs of weakening, with a softening labor market and inflation still well above the Fed's 2% target. However, the political drama around the Fed, including the DOJ investigation and Supreme Court case, is likely to overshadow the economic discussion.

  • The Federal Reserve will announce its rate decision at 2 p.m. Eastern Time on Jan. 28, 2026.
  • The Fed chair's press conference will follow at 2:30 p.m. Eastern Time on Jan. 28, 2026.

The players

Jerome Powell

The current Chair of the Federal Reserve, whose term is set to expire in May 2026. Powell is the subject of a Department of Justice investigation related to the central bank's renovation of its historic buildings.

Lisa Cook

A Federal Reserve Governor whose job is currently being challenged in a Supreme Court case after President Trump sought to fire her.

Donald Trump

The former President of the United States, who has repeatedly pressed the Federal Reserve to lower interest rates and is expected to name a successor to Powell as Fed chair.

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What they’re saying

“It's appropriate that they take a little bit of a beat to digest the information and try to set the stage for 2026.”

— Stephen Kates, Financial Analyst, Bankrate (CBS News)

“Rates on several types of loans are at their lowest levels in years and should keep drifting down for a little while longer. That's a relief at a time when affordability is still a real struggle for many families.”

— Matt Schulz, Chief Consumer Finance Analyst, LendingTree (CBS News)

“We expect that Powell will use his platform to provide an erudite but accessible defense of central bank independence.”

— Joe Brusuelas, Chief Economist, RSM (CBS News)

What’s next

The Federal Reserve will announce its next interest rate decision in March 2026, and President Trump is expected to name a successor to Jerome Powell as Fed chair in the coming weeks.

The takeaway

The Federal Reserve's upcoming interest rate decision is overshadowed by political turmoil, as the central bank seeks to maintain its independence and make data-driven policy decisions amid pressure from the White House. The outcome of the Supreme Court case and the selection of the next Fed chair will be crucial in determining the future direction of monetary policy.