Yeliz Akmaca 
Jerome Powell signaled that the Federal Reserve may pause its rate-cut cycle heading into the January FOMC meeting. His remarks boosted the odds of unchanged rates while Bitcoin, which briefly touched ninety-four thousand dollars, pulled back to ninety-two thousand. The shift in expectations reshaped market sentiment across equities and crypto.
Jerome Powell’s comments suggested a more cautious stance on monetary easing. The speech also reinforced concerns about inflation risks and the slowing labor market, creating renewed volatility in digital assets.
Fed Signals a Pause as Neutral Rate Comes Into View
Powell emphasized that this year’s rate reductions have brought policy into a “range of plausible estimates of neutral.” This phrasing indicated that the Fed sees less urgency for further cuts. He said any additional moves would depend on incoming data, the evolving economic outlook, and the balance of risks. The message aligned with a growing market view that an aggressive cutting cycle is unlikely.
The Fed chair also stated that labor market conditions are cooling while inflation remains somewhat elevated. He noted that downside risks to employment have increased, yet inflation risks continue to show an upward tilt. Powell reiterated that few inflation readings have been released since the October meeting, but the overall picture has not shifted significantly, justifying the recent twenty-five basis-point cut.
Additionally, Powell confirmed that purchases of short-term Treasury securities will support effective control of the policy rate. This operational detail highlights the Fed’s effort to manage volatility in funding markets during a sensitive policy phase.
January Rate-Cut Odds Collapse During Powell’s Speech
CME FedWatch data showed a sharp drop in expectations for another rate cut at the January meeting. Markets now assign only a twenty-four percent chance of a twenty-five-basis-point cut, while the probability of rates remaining unchanged has surged to seventy-six percent. This shift reflects the Fed’s more data-dependent posture heading into 2026.
The Federal Reserve will have two critical inflation reports to evaluate before the meeting. The Producer Price Index arrives on January fourteenth, and the Consumer Price Index will be released one day earlier. Both will heavily influence rate-path projections.
Despite the Fed projecting just one rate cut for 2026, Bloomberg chief economist Anna Wong sees room for a total of one hundred basis points in reductions next year. She expects weaker payroll growth and limited evidence of an inflation rebound. Powell’s term expires in May, and former President Trump is expected to appoint a chair who supports faster easing.
Key rate expectations include:
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Seventy-six percent probability of unchanged rates in January
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Twenty-four percent chance of a twenty-five-point cut
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Fed median outlook shows a single cut for 2026
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Some analysts still expect as much as one hundred basis points of easing
Bitcoin Rallies on Speech, Then Reverses as Fed Uncertainty Rises
Bitcoin spiked to ninety-four thousand dollars during Powell’s remarks, reflecting early optimism about future easing. However, the move quickly reversed, and the price slid to ninety-two thousand. This pattern mirrors the sharp swings seen after several FOMC events throughout the year.
The correction underscores how sensitive crypto markets remain to U.S. monetary policy. Traders are reassessing risk appetite as the Fed signals a pause, and macro expectations continue to dictate short-term momentum. With rate-cut uncertainty rising, digital assets may face additional volatility in the first quarter of next year.
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