Fed's Inflation Gauge Shows No Change, Rates Likely to Hold at 3.5%-3.75% - FOMC Meeting Jan 29

The Federal Reserve is on track to hold interest rates steady at its Jan. 29 meeting, as a delayed Personal Consumption Expenditures (PCE) index showed core inflation unchanged at 2.8% year-over-year and 0.2% month-over-month for October and November. The data, released Jan. 22 due to the government shutdown, used proxy figures from September and November to fill gaps in CPI data. Economists view the report as stale, given that December CPI and PPI data suggest core PCE may rise to 3% in December, with official numbers expected Feb. 20. Joseph Brusuelas of RSM said the latest data reinforces expectations of no rate cuts in the first quarter of 2026. Strong consumer spending and revised third-quarter GDP growth of 4.4% support the Fed’s cautious stance. Capital Economics’ Thomas Ryan noted real consumption rose 0.3% in both October and November, signaling resilient demand. The Fed is expected to maintain rates in the 3.5%–3.75% range after three cuts in late 2025.