Latest / Markets with Megan: A Quick Financial Markets Update / The Fed Signals Stability in Jobs and Growth | S3 E116 | 01-28-2026

Transcript

The Fed Signals Stability in Jobs and Growth | S3 E116 | 01-28-2026 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: There were no major surprises from the Federal Reserve today.
• 0:02
  Megan Horneman: It is Wednesday, January the 28th, and this is Markets with Megan.
• 0:06
  Megan Horneman: If you like this podcast, subscribe, hit the alarm bell.
• 0:09
  Megan Horneman: You can share with your friends, family, or colleague, anybody who's looking to understand some of that economic data or market moving events that we receive, what it means for your investments.
• 0:19
  Megan Horneman: So today we had the FOMC meeting, and remember the FOMC sets interest rate policy here in the US.
• 0:26
  Megan Horneman: And as expected, they did not change interest rates after cutting the past few meetings.
• 0:32
  Megan Horneman: They left interest rates unchanged at a level of 350 to 375.
• 0:37
  Megan Horneman: There were two voting members that actually dissented.
• 0:40
  Megan Horneman: That was Waller and Moran.
• 0:43
  Megan Horneman: They wanted a 25 basis point rate cut.
• 0:45
  Megan Horneman: They've been the doves there on the committee.
• 0:48
  Megan Horneman: Now, with the statement, the the statement mentioned things like the downside risk to employment had risen.
• 0:55
  Megan Horneman: They removed that statement from their last statement.
• 0:59
  Megan Horneman: Inflation remains somewhat elevated.
• 1:02
  Megan Horneman: They were positive on the economy, saying economic activity expanded at a solid place pace, and that unemployment has shown some signs of stabilization.
• 1:12
  Megan Horneman: Now they release a statement with their um with their with their decision on interest rates, but then they come out with the chairman Chairman Powell does a press conference.
• 1:23
  Megan Horneman: And in the press conference, we get a little bit more detail about what actually happened at the meeting.
• 1:28
  Megan Horneman: Um these are some of the things that Powell was questioned about, and he he mentioned.
• 1:33
  Megan Horneman: He did mention about the government shutdown.
• 1:36
  Megan Horneman: Um he thought that there was some temporary um downside to the economy in the last quarter, but that it should rebound now into the first quarter of this year.
• 1:46
  Megan Horneman: Um he did mention from the job perspective that job growth, any of the weakness they're seeing there has a lot to do with um immigration and the change in the labor force participation.
• 1:57
  Megan Horneman: But he was very hawkish on the economy, saying it's on a firm footing.
• 2:01
  Megan Horneman: Um, he was negative on housing and mentioning how that continues to be weak.
• 2:06
  Megan Horneman: He was asked a lot about um tariffs.
• 2:09
  Megan Horneman: And when he mentioned tariffs, he thinks that it should be viewed as a one-time increase.
• 2:14
  Megan Horneman: He doesn't see it having a bigger impact on inflation.
• 2:17
  Megan Horneman: He thinks that once the tariffs work their way through, um, that we should see inflation continue to improve.
• 2:24
  Megan Horneman: Um, he did mention some of the distortions that we had from the employment data because of that government shutdown.
• 2:32
  Megan Horneman: And he mentioned that he saw signs from the labor market that you know had been had been stabilizing and that the outlook for the economy just continued to improve since the last meeting.
• 2:44
  Megan Horneman: That was one of the reasons why they changed their comment where they removed the downside risk to the employment.
• 2:52
  Megan Horneman: Um instead, they are seeing some stabilization there.
• 2:55
  Megan Horneman: They he was also asked, lastly, on the timeline for future rate cuts.
• 3:00
  Megan Horneman: And we know that this is a meeting by meeting, and wasn't surprising that he reiterated that.
• 3:04
  Megan Horneman: But when you read between some of the lines here, he was very hawkish on what the economic, what the economy looks like right now.
• 3:12
  Megan Horneman: He said clearly there's a clear improvement in economic growth.
• 3:16
  Megan Horneman: Um, inflation is decelerating, but it's as basically expected, that the labor market has shown those signs of stabilization.
• 3:25
  Megan Horneman: Um, he he continued to say it's a meeting by meeting.
• 3:28
  Megan Horneman: They'll they'll assess the economic data.
• 3:30
  Megan Horneman: But in this meeting, there was broad support, not just from the voting members, but even those non-voting members to keep interest rates steady.
• 3:39
  Megan Horneman: So, and to sum it all up, there's a lot of jargon in here.
• 3:43
  Megan Horneman: The Fed thinks the economy is on a very solid footing, entering this year on a solid at a solid pace.
• 3:49
  Megan Horneman: They're still very much worried about inflation, even though it has been improving.
• 3:54
  Megan Horneman: They do want to see more evidence that it continues its downward trajectory.
• 3:58
  Megan Horneman: And from the labor market perspective, they do not seem concerned about um the slowdown in job growth.
• 4:04
  Megan Horneman: In fact, they think that the that the labor market is stabilizing.
• 4:08
  Megan Horneman: Now, the markets, um, not a ton of movement in the markets.
• 4:11
  Megan Horneman: You're seeing a little bit more in the bond markets.
• 4:13
  Megan Horneman: Yields are higher because now the expectation for additional rate cuts is still up in the air for this year.
• 4:20
  Megan Horneman: When we looked at the um Fed funds future contracts before coming in to record the podcast, it's still looking for now one, maybe two interest rate cuts, but that will be later in the year.
• 4:32
  Megan Horneman: Um, we still think that's optimistic because as the chair chairman noted, the economy is on a solid footing.
• 4:39
  Megan Horneman: And this first quarter, there's going to be a lot of from the tax refund basis that should support consumer spending.
• 4:46
  Megan Horneman: So we don't see any big deterioration in the economic growth.
• 4:50
  Megan Horneman: If that doesn't deteriorate, it it's kind of hard to not think that inflation will continue to be just this persistent issue and that there is a lot of risks for inflation scarce this year.
• 5:01
  Megan Horneman: So we still stand in the camp that the Fed's likely on hold for the it for indefinitely through 2026.
• 5:08
  Megan Horneman: That's all we have today.
• 5:09
  Megan Horneman: And if you want a history of our podcast, you can go to marketswithmegan.fm.
• 5:12
  Megan Horneman: Thank you.