Federal Reserve Watcher · Rate Decision | Date: January 25/26, 2026
Probabilistic assessment of the next Federal Reserve policy decision
Final Decision Engine | Meeting: January 25/26, 2026
Inputs Used: Macro Signal Synthesiser; Fed Tone Decoder; Fed Projections Synthesiser; Beige Book Summary.
- Macro Signal: CUT (confidence: MEDIUM) — Disinflationary pressures, cooling labor market, and elevated financial stress justify further easing (31).
- Behavioural Feasibility: HOLD-BIASED — The Fed has delivered three consecutive 25bps cuts since September 2025, with the last meeting showing significant internal division on the path ahead (7)(9).
- Fed Worldview: CUT — The dominant risk narrative emphasizes downside labor/growth risks, with policy cuts framed as "risk-management" actions to preemptively limit damage, despite sticky near-term inflation (7)(4).
- Real-Economy Confirmation: CONFIRMS — The Beige Book indicates unchanged to modestly declining overall activity, cooling labor demand, softening consumer spending, and moderate but persistent tariff-driven price increases (1).
Divergence (this is signal):
- Macro says: CUT
- Behaviour says: HOLD
- Fed worldview says: CUT
Decision Probabilities (sum = 100%):
- CUT: 30%
- HOLD: 70%
- HIKE: 0%
Forward Guidance Bias: DOVISH — Will likely reiterate concerns over downside employment risks and commit to data dependency, signaling readiness for future easing if conditions warrant it (4)(1). This is further evidenced by specific dovish calls for more easing from some members (5).
Surprise Risk: MEDIUM — Arises from the divergence between macro conditions and the Fed's risk-focused worldview (both leaning CUT) versus the behavioral inertia and explicit internal divisions following three consecutive rate cuts (7). A cut would surprise given path dependency, while a hold could lead to notable dovish dissents.
Final Call: Outcome: HOLD with dovish guidance.