Markets price in fewer rate cuts as Fed holds on tariff uncertainty, persistent inflation

GLOBAL markets are pricing in fewer rate cuts for the year as the US Federal Reserve unsurprisingly kept rates on hold on Wednesday (Jan 29).

In the first Federal Open Market Committee meeting of the year, the Fed kept rates steady, and repeated that it was “in no hurry” to adjust its policy stance.

“We’ve long said persistent inflation pressures would prevent the Fed from cutting far or fast – and that this would not be a typical rate-cut cycle, but a fine-tuning of the policy stance. That is what is now materialising,” said Jean Boivin, head of the BlackRock Investment Institute.

Markets have been adjusting to high-for-longer in recent months, and are now pricing just two Fed rate cuts this year, with the next one not until June, he added.

While the move was unsurprising, market observers expect that uncertainty arising from US President Donald Trump’s policies will continue to weigh on the Fed’s movements.