{"id":6810,"date":"2026-01-28T22:02:34","date_gmt":"2026-01-28T22:02:34","guid":{"rendered":"https:\/\/www.rbc.com\/en\/economics\/?p=6810"},"modified":"2026-04-02T23:50:26","modified_gmt":"2026-04-02T23:50:26","slug":"fomc-recap-one-thing-is-clear-the-fed-still-facing-a-foggy-outlook","status":"publish","type":"post","link":"https:\/\/www.rbc.com\/en\/economics\/us-analysis\/us-data-flashes\/fomc-recap-one-thing-is-clear-the-fed-still-facing-a-foggy-outlook\/","title":{"rendered":"FOMC Recap: One thing is clear \u2013 the Fed is still facing a foggy outlook"},"content":{"rendered":"\n
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The Federal Reserve kept rates unchanged in its January 28th decision, as expected, and upgraded its assessment of the economy and job market while continuing to highlight that inflation remains elevated. It was largely what markets already knew to be true and thus more of a mark-to-market event than a provision of more information. And yet, while the meeting may have appeared to be a nonevent on the surface, there are three key stories associated with their decision that deserve focus. Indeed, it bolsters our view that in 2026, the Federal Reserve is likely to remain on the sidelines.<\/p>\n\n\n\n

Uncertainty is still significant \u2013 for markets and policymakers<\/h4>\n\n\n\n

While markets may be growing accustomed to uncertainty, this persistent fog over both the current state of the economy as well as its outlook renders policymaking increasingly more challenging. Driving the uncertainty: absent or partial data for Q4 following the government shutdown, a lack of clarity over tariff policy (from both new tariffs and pending court rulings), and the upcoming transition of Fed leadership. The rising odds of another government shutdown beginning Feb 1st<\/sup> certainly won\u2019t help.<\/p>\n\n\n\n

In our view, while a pause is justified by the underlying data, it\u2019s also consistent with Chair Powell\u2019s own October comments: \u201cWhat do you do if you are driving in a fog? You slow down.\u201d Slow down the Fed has.<\/p>\n\n\n\n

In particular, the true pace of US inflation (one side of the Fed\u2019s dual mandate) in Q4 is a particular question market. Recall that:<\/p>\n\n\n\n