Fed likely to hold rates in January, analysis suggests

The U.S. Federal Reserve is likely to hold interest rates steady in January as it considers preemptive measures to prevent a liquidity drain, CoinDesk reported. According to the minutes from the December Federal Open Market Committee (FOMC) meeting, the Fed is weighing the purchase of short-term Treasury bills and an expansion of its repo facility. The minutes noted that current liquidity pressures are building faster than during the 2017-2019 quantitative tightening period, prompting the Fed to consider buying $220 billion in short-term Treasurys. The market is now focused on the first FOMC meeting of the year on Jan. 27-28, with the CME FedWatch Tool indicating an 85.1% probability of a rate hold. The prevailing analysis suggests the Fed will prioritize liquidity management over rate cuts.