4 min readThe Federal Reserve left interest rates unchanged in the first meeting of 2026. The vote was 10-2 to leave rates at 3.5% to 3.75% after three consecutive rate reductions at in the final three meetings of last year. Governors Waller and Miran voted for a 25bps cut.
Policymakers cited improving economic conditions as a reason to be cautious about further rate cuts. The statement pointed to signs of stabilisation in the jobs market. Language pointing to increased downside risks to employment that appeared in the previous three statements was removed. The upgraded outlook for the labour market would likely keep rates on hold in the near term.
In the press conference, Federal Reserve Chair Jerome Powell noted that the outlook for economic activity had improved since the last meeting, giving the Fed more reason to be cautious with further cuts. Policymakers also remain concerned about sticky inflation.
DOLLAR INDEX (DXY):
The US Dollar Index was trading higher ahead of the FOMC rate decision, and has maintained those gains following the announcement, but remains near its 4 year low of 95.55 reached yesterday.
EURO vs DOLLAR (EUR/USD):
If we take a closer look at the technicals, we can observe how the EUR/USD price was trading around 1.1940 before the decision, and post the decision, the EUR/USD spiked to a low of 1.1895, the 20 SMA, before recovering back to 1.1940. The near-term uptrend remains intact.
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S&P 500 (SDX):
The S&P 500 has also seen a modest impact from the decision and Fed Powel’s early comments. The price was trading higher before the decision, briefly reaching a record high of 7010 earlier in the day. Afterwards, the S&P 500 settled -0.06% at 6978, up from the low of 6945. Attention then turned to big tech earnings with Tesla, Microsoft and Meta reporting after the close. The price remains in an uptrend on the 4-hour chart, in a rising channel.
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