The Federal Open Market Committee (FOMC) confirmed on 28 Jan that it will maintain interest rates within the 3.50% to 3.75% range, ignoring intense pressure from an administration currently attempting to litigate the central bank into submission.
This decision follows a period of unprecedented friction where Chair Jerome Powell has found himself defending the institution against Department of Justice subpoenas and a Supreme Court challenge to the very structure of the board. For now, the Fed remains the lone adult in the room, choosing to focus on sticky inflation rather than the political survival of its detractors.
The AI-powered jobless boom
Policymakers pointed to an economy that continues to grow at a 4.4% annualised rate, even as the benefits of that growth fail to reach the average worker. This expansion is increasingly a jobless boom driven by business investment in artificial intelligence, which rose by 3.2% as companies use technology to maintain output while freezing headcounts. With nonfarm payrolls rising by a measly 50,000 in December, the Fed is clearly concerned that any immediate easing would simply pour fuel on the 2.8% core inflation fire without actually helping the cooling labour market.
Political shadows and judicial threats
The hold comes as the Supreme Court deliberates on Trump v. Cook, a case that could grant the president the power to fire governors at will and effectively end the era of independent monetary policy. While the administration argues for more control, the markets are already looking past Powell toward a potential Rick Rieder era. The BlackRock executive currently leads the betting markets on Kalshi and Polymarket, as Treasury Secretary Scott Bessent prepares to announce a nominee who might prove more reactive to market whims. In this environment, a rate hold serves as a statement of defiance against executive overreach.
Crypto remains in the liquidity trap
Digital asset markets reacted with a collective yawn, as Bitcoin continues to consolidate around the $90,000 level. Following a 25 basis point cut in December 2025 that failed to spark a sustainable rally, onchain assets remain trapped in a high-beta relationship with tech sector liquidity. According to the CME FedWatch tool, the probability of a pause was almost certain, leaving investors to wait for a clear directional signal from the US dollar.
Until the Federal Reserve moves away from its restrictive stance, Bitcoin is likely to remain range-bound, serving as a reminder that even the most decentralised assets are not immune to the gravity of the dollar.
