Next Fed Meeting: When It Is In January And What To Expect on Interest Rates

Key Takeaways Fed officials are scheduled to meet Jan. 27 and 28 to set the nation's monetary policy, and will consider whether to cut the central bank's key interest rate for a fourth consecutive meeting. Financial markets expect the Fed to hold interest rates steady at the January meeting. Fed officials are torn between cutting rates to boost the faltering job market or keeping them high to subdue inflation that's still over the Fed's goal of a 2% annual rate. The Federal Reserve's policy committee is scheduled to meet next on Jan. 27 and 28, and officials are expected to hold the central bank's key interest rate steady after a series of cuts in recent months. The Fed has cut interest rates in recent months as concerns have grown about weakness in the labor market.Andrew Harnik / Getty Images What To Expect From The January Meeting The Federal Open Market Committee will meet to consider whether to cut the federal funds rate from its current range of 3.5% to 3.75%. The Fed cut its interest rate by a quarter of a percentage point at each of the previous three meetings in an effort to prevent the recent job market slowdown from turning into a serious increase in unemployment. Fed officials have been divided about whether to cut interest rates to help the job market or keep them high to fight inflation. The Fed's dual mandate from Congress requires it to keep inflation low and employment high, and both have been headed in the wrong direction in recent months, creating a dilemma for the Fed. Lower borrowing costs could help encourage hiring, but could risk stoking inflation. "A very large number of participants agree that risks are to the upside for unemployment and to the upside for inflation," Fed Chair Jerome Powell said after the December meeting of the policy committee. "So what do you do? You've got one tool. You can't do two things at once. So at what pace do you move? It's a very challenging situation." After three consecutive cuts, financial markets now expect policymakers to hold interest rates steady to see what direction the economy takes, and which problem emerges as the more serious risk. As of Monday, traders were pricing in an 80% chance the Fed would hold steady, according to the CME Group's FedWatch tool, which forecasts rate movements based on fed funds futures trading data. The fed funds rate influences borrowing costs on short-term loans such as credit cards and car loans, and indirectly affects rates for mortgages and other longer-term credit. Easier money generally encourages spending and boosts the economy, while higher interest rates reduce demand and push down inflation . What This Means For The Economy With both inflation and unemployment trending higher recently, the economy increasingly risks entering a state of "stagflation," or stagnant economic growth and a poor job market combined with high inflation. The Fed aims to avoid this outcome by setting the fed funds rate appropriately. Inflation Hawks...

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