Image Source: Pixabay

The US Federal Reserve and several key global central banks are expected to keep interest rates unchanged this week. This decision comes amid growing political pressure, legal scrutiny, and global economic uncertainties, as officials aim to maintain policy stability while observing recent shifts in inflation and growth trends.

Central Banks Maintain Course Amid Political and Market Strain

The US Federal Reserve is set to hold interest rates unchanged at the end of its January meeting. The decision comes as Fed Chair Jerome Powell faces criticism from President Donald Trump for not lowering borrowing costs.

The Fed and three of the central banks that just backed its embattled chair are poised to keep rates unchanged this week https://t.co/WhqyEpiYkv

— Bloomberg (@business) January 24, 2026

Central banks in Brazil, Canada, and Sweden are expected to follow a similar path and keep policy rates unchanged. These institutions recently joined others, including the Bank of England and the European Central Bank, in voicing support for Powell and defending central bank independence.

Inflation and Growth Data Shape Policy Outlook

Despite political pressure, the Fed remains guided by economic data. Recent figures show US unemployment falling and inflation still above the 2% target. This gives room to pause after three consecutive rate cuts in 2025.

Powell is likely to state that current policy is suitable but will avoid indicating future rate moves. The central bank aims to assess the effect of past rate reductions before adjusting further.

Canada’s central bank is also expected to leave its key rate at 2.25%. Officials there point to weak growth and uncertainty surrounding trade agreements with the US. A neutral stance is seen as appropriate in the current environment.

Legal Developments Add Pressure on Fed

Alongside political pressure, the Fed is facing legal scrutiny. The Supreme Court is reviewing a case on whether President Trump can dismiss Fed Governor Lisa Cook. Powell also revealed that the Justice Department has issued subpoenas to the Fed.

Despite these issues, central banks worldwide have backed Powell. IMF Managing Director Kristalina Georgieva remarked during the World Economic Forum, “We’re not in Kansas any more,” referring to rising global vulnerabilities.

Diverging Policies in Emerging Economies

Emerging markets are taking different approaches. In Africa, central banks in Ghana and Mozambique are expected to cut rates due to easing inflation. South Africa may reduce rates by 25 basis points.

In Latin America, Brazil is expected to hold its 15% policy rate. Inflation has risen above the 4.5% ceiling of the central bank’s tolerance range. A gradual easing cycle may begin later this year.

Colombia’s central bank may increase its rate to 9.75% following a 23% hike in the minimum wage and rising inflation expectations. Mexico is forecast to avoid recession as output shows signs of recovery.

Global Data Releases Could Influence Future Moves

The coming week includes data releases from several major economies. The US will publish consumer confidence, durable goods orders, and wholesale price data. Australia and Japan will release inflation numbers, while China will report industrial profits. These reports may offer insights into global demand and supply trends.

In Europe, GDP data from France, Italy, and Spain is expected to show moderate growth. Central banks in Hungary, Ukraine, and Sweden will also hold policy meetings, though most are expected to maintain current rates.

More By This Author: