Powell’s term as Fed chief ends soon. His words carry more weight than ever.

Subscribe to enjoy similar stories. The Federal Reserve will almost certainly leave interest rates unchanged at its policy meeting this coming week, keeping its benchmark policy rate at 3.5% to 3.75%. Markets know it.

Policymakers know it. Even Fed Chair Jerome Powell knows it. And yet, Powell’s post-meeting news conference on Jan.

28 will likely be one of the most closely followed of his tenure, given political pressures swirling about the Fed. The Fed enters 2026 having cut the federal-funds rate target range by three-quarters of a percentage point in the second half of 2025. Inflation has come off highs but remains above the Fed’s 2% target, with recent data offering little evidence of a clear path lower.

The unemployment rate, now 4.4%, has drifted higher but hasn’t surged. Hiring has slowed, but layoffs remain muted. That combination suggests a rate-cut pause.

Citi economists say Fed officials will be “comfortable leaving policy rates on hold." But the signal that matters, they say, will come from Powell’s tone, particularly “how much Powell keeps the door open to future cuts." Political headlines, trade uncertainty, and shifting expectations around Fed leadership have made investors quicker to react to Powell’s tone than to the data. Investor sentiment can turn quickly when policy speculation collides with politics, says Ben Fulton, chief executive of WEBs Investments, leaving markets vulnerable to sharper moves if Powell’s language alters expectations. Powell has recently changed his tone regarding political interference.