The Federal Open Market Committee (FOMC) of the U.S. Federal Reserve will hold its regular meeting from January 28 to 29, marking a pivotal event for Wall Street this week. The meeting is being closely watched following a recent statement by U.S. President Donald Trump at the World Economic Forum (WEF) in Davos, Switzerland, where he called for immediate interest rate cuts both domestically and internationally, urging global counterparts to follow the U.S. lead. This public pressure adds to the ongoing debate over the Fed’s next move.
Despite Trump’s call, market expectations largely lean towards the likelihood of the Fed maintaining current interest rates during this FOMC gathering. This sentiment is driven by the U.S. inflation rate, which remains above the Federal Reserve’s target of 2%, as well as the continued strength of the U.S. economy.
The latest data from the U.S. Department of Labor revealed that the Consumer Price Index (CPI) rose by 2.9% year-on-year in December, marking the highest rate of inflation in five months. This uptick in inflation further complicates the Fed’s decision-making process, particularly as concerns linger that potential tariffs imposed by President Trump could exacerbate inflation by raising import prices. As a result, the likelihood of a rate freeze in January stands at 97.9%, according to the CME FedWatch Tool, based on the federal funds rate futures market.
In addition to the Fed’s decisions, several key economic reports are set to be released this week. On January 30, the U.S. will publish its weekly initial jobless claims alongside the preliminary fourth-quarter GDP growth rate. The following day, January 31, will bring the release of the December Personal Consumption Expenditures (PCE) index and the January Chicago Purchasing Managers’ Index (PMI).
Corporate earnings will also be a major focus, with four companies from the so-called Magnificent 7 (M7) set to report results. On January 28, Boeing, General Motors, and Starbucks will disclose their earnings, followed by Tesla, Meta, and Microsoft on January 29. Apple, Intel, Visa, Mastercard, and UPS are slated to announce their financials on January 30.
This week’s events will provide key insights into the state of the economy and corporate performance, as well as offer critical clues regarding the Fed’s stance on interest rates moving forward.
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