UBS(US:UBS) Sou Hu Cai Jing·2026-01-29 08:32Core Viewpoint - The Federal Reserve has decided to maintain interest rates, marking the first pause in its easing cycle after three consecutive rate cuts since mid-2025. However, two members of the Federal Reserve Board expressed dissent, advocating for further rate cuts [1]. Group 1: Federal Reserve's Decision - The Federal Reserve's decision to pause rate cuts aligns with Chairman Powell's previous indication that the threshold for future cuts would be raised [1]. - The FOMC statement retained guidance on "additional adjustments," suggesting that the easing cycle is not over, but removed the phrase regarding "increased risks to employment" [1]. - Powell's comments reflected a more optimistic view of the labor market, indicating that current policy is in a "reasonable neutral estimate range" [1]. Group 2: Economic Outlook - Powell's outlook on economic growth and the labor market has become notably more positive, citing signs of stability in labor market data despite ongoing economic cooling [1]. - UBS maintains its expectation for one more rate cut in Q1 2026, but notes that the likelihood of a delay until summer is increasing, contingent on the labor market's performance and inflation trends [1]. Group 3: Future Rate Cut Expectations - Market expectations suggest that the next rate cut may occur after Powell's term ends in July, with two FOMC meetings remaining during his tenure [2]. - Uncertainty surrounds the timeline for the appointment of a new Federal Reserve Chair, as a key Republican senator has indicated a pause on nominations until the conclusion of a Justice Department investigation [2].