Federal Reserve pauses rate cuts: end of rate hike cycle, interest rates may remain unchanged until June

As the Federal Reserve decided to keep the benchmark interest rate within the target range of 3.5% to 3.75% at its January 28, 2026 meeting, market expectations for rate cuts have been pushed back to June of this year.

The decision was approved by 10 votes in favor and 2 votes against. The two dissenting officials advocated for a 25 basis point cut. The Fed stated in its announcement that economic activity continues to expand at a steady pace, employment growth remains low, unemployment shows some signs of stabilization, and inflation remains at a relatively high level.

01 Core Meeting Decisions

At its first policy meeting of 2026, the Federal Reserve made a highly watched decision—to keep interest rates unchanged. This decision reflects the complex balance policymakers face given the current state of the U.S. economy.

The target range for the federal funds rate remains at 3.5% to 3.75%, unchanged after three consecutive rate cuts in 2025.

The Federal Open Market Committee (FOMC) stated in its release: “Available indicators suggest that economic activity has been expanding at a solid pace.” At the same time, officials removed previous language about increased risks to employment.

This change indicates a subtle shift in the Fed’s assessment of the economic outlook. While inflation pressures have eased somewhat, the core Personal Consumption Expenditures (PCE) index remains above the 2% target, which is a primary consideration for delaying rate cuts.

02 Behind the Economic Data

The Fed’s decision to hold rates steady is based on a comprehensive assessment of key economic indicators. Recent data show a complex and contradictory picture of the U.S. economy.

In Q3 2025, U.S. GDP grew at a 4.4% annualized rate, with projections suggesting it could reach 5.4% in Q4. Such growth is significantly above trend levels, providing data support for delaying rate cuts.

On the employment front, new job creation remains low, but the unemployment rate fell to 4.4% in December, showing signs of stabilization.

Inflation remains a core concern for the Fed. In December, the Consumer Price Index (CPI) increased by 2.7% year-over-year, and the core PCE index rose by 3.0% YoY, both still notably above the Fed’s 2% long-term goal.

03 Market Reactions and Expectations

Following the Fed’s announcement, market reactions were relatively calm. Expectations for rate cuts this year have been significantly delayed, with most anticipating the earliest possible rate adjustment in June.

U.S. Treasury yields rose after the decision, reflecting a re-pricing of rate cut expectations. The stock market remained stable, with the S&P 500 index hovering around 7,000 points.

According to JPMorgan analysis, the market currently considers the likelihood of a rate cut at the March meeting to be very low, with most strategists expecting only one or two cuts in 2026.

This shift in expectations reflects the market’s gradual acceptance of a reality: in an environment of strong economic data and inflation still above target, the Fed lacks an immediate urgency to cut rates.

04 Internal and External Pressures on the Fed

Behind the seemingly calm rate decision, the Fed faces pressures from multiple fronts. Internal policy disagreements and external political interventions create a complex decision-making environment.

There were 2 dissenting votes at this meeting, with two officials advocating for a 25 basis point cut. This disagreement reflects differing judgments within the committee about the persistence of inflation.

Meanwhile, Fed Chair Powell faces pressure from the White House. President Trump has publicly criticized the Fed’s rate-holding policy multiple times, calling Powell a “bad Fed chair.”

The Fed’s independence is also under challenge. The Department of Justice has launched a criminal investigation into Powell, related to budget overruns in the renovation of the Fed’s headquarters. These external pressures require the Fed to be more cautious in policymaking.

05 Impact and Opportunities in the Crypto Market

The Fed’s delay in rate cuts has created a unique macro environment for the crypto market. Traditional financial interest rate policies have a complex and direct relationship with crypto asset prices.

In a high-rate environment, the short-term appeal of risk assets may be suppressed, but in the long run, this provides a more stable macro backdrop for the crypto market.

Gate, a leading cryptocurrency trading platform, has recently seen its Gate Alpha segment become a key hub for liquidity in Chinese Meme coins.

Tokens like “I’m Coming” have surged over 420% in a single day. This phenomenon indicates that even in a tightening monetary policy environment, the crypto market can still generate significant investment opportunities.

06 Future Policy Path

Looking ahead, the Fed’s monetary policy will be highly data-dependent. Powell explicitly stated: “Policy does not have a preset path; decisions will be made at each meeting.”

The next FOMC meeting is scheduled for March 17-18. The market generally expects the Fed to continue holding rates steady at that time, with the earliest rate cut likely considered at the June meeting.

Policy makers will closely monitor inflation data, labor market conditions, and economic growth trends. Powell specifically noted that tariff-induced inflationary pressures might be temporary and are expected to peak around mid-2026.

With Powell’s term ending in May 2026, the selection of the new chair and their policy inclinations will also be key factors influencing the future direction of monetary policy.

Future Outlook

As the market pushes the rate cut expectation to June, Bitcoin is trading at approximately $82,500 on the Gate platform, while Ethereum is around $2,730.

The crypto market has already priced in the impact of sustained high interest rates. During the window before the Fed’s next meeting, investors are closely watching inflation data and employment reports, seeking clues for policy shifts.

Regardless of the Fed’s next move, capital is always searching for the best opportunities.