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• Verizon is offering a credit to customers who were affected by its widespread outage earlier this week.
• Customers can claim a $20 account credit, though the company didn't say whether there is a deadline for claiming it.

Verizon wireless customers can receive a $20 credit on an upcoming monthly bill, as long as they remember to claim it.

Verizon Communications (VZ) said Thursday morning that customers who were affected by Wednesday's outage can redeem a $20 account credit through their Verizon account. The company said that $20 on average would cover the cost of several days of a cell phone plan, and said that customers would receive a text once the credit is available, while business customers will be contacted directly about their credits.

Verizon said the outage had been resolved as of 10:15 p.m. ET Wednesday night, but has not disclosed what caused the outage that led to more than 2 million reports on outage tracker DownDetector.

If you're a Verizon customer who was affected by Wednesday's outage, you can redeem a $20 account credit through your account page, the company said. Verizon didn't say whether there is a deadline consumers need to redeem the credit by.

Verizon did not immediately respond to a request for comment on how many customers were affected, or how many customers are expected to claim the credit. As of its latest quarterly report in October, Verizon said it has 146.1 million total retail wireless phone lines connected to its service.

A number of outages among cloud and software services have marked the last several years, from hosting providers such as Cloudflare (NET) and Amazon's (AMZN) AWS to a massive mid-2024 outage caused by an update from cybersecurity software firm CrowdStrike (CRWD). Verizon rival AT&T (T) had its own large outage nearly in February 2024, and later said it would automatically apply an account credit to affected customers.

Verizon shares were down 0.7% in early-afternoon trading. The stock has gained 2% over the past 12 months, lagging the performance of the benchmark S&P 500 index, which has gained 17% over the period.

News of the day for Jan. 16, 2026

Stock futures are pointing to a higher open Friday after major indexes closed higher yesterday for the first time in three days; the White House is reportedly looking to set up an emergency energy auction that would lead to big tech companies paying for the construction of new power plants; regional bank results are closing out a busy week of earnings reports; shares of J.B. Hunt are lower after the trucking company reported weak revenue; and several Federal Reserve officials are scheduled to speak on Friday. Here's what you need to know today.

Stock futures are slightly higher this morning ahead of the long weekend, as markets will be closed Monday for Martin Luther King Jr. Day. Futures tied to the S&P 500 and Nasdaq were recently up 0.1% and 0.4%, respectively, while Dow Jones Industrial Average futures hovered near unchanged. The major indexes gained on Thursday, snapping a two-day losing streak. Semiconductor stocks led the rally after Taiwan Semiconductor Manufacturing Co. (TSM) turned in another strong quarter, while banking stocks recovered thanks to solid earnings from Goldman Sachs (GS) and Morgan Stanley (MS). Crude oil futures are on the rise again Friday, up 1.5% at around $60 per barrel. Gold futures were down slightly for the second day in a row, but still trading above $4,600 an ounce and not far from record highs. Bitcoin was little changed at $95,400, while the yield on the 10-year Treasury note, which affects borrowing costs on a wide range of loans, rose to 4.19% from 4.16% at yesterday's close.

Americans who live near data centers may have seen their electricity bills rise in recent months, but the White House wants to change that. The Trump administration is expected to announce plans on Friday for a wholesale energy auction that would see big tech companies pushed to have more of a hand in funding the construction of new power plants to go along with their data centers, according to Bloomberg. The report said that tech companies will likely bid on 15-year contracts for new electricity generation capacity, helping to fund billions in costs for building new power plants. Several tech companies have already partnered with energy companies, mostly nuclear power-based, to provide their data centers with power for years to come.

A busy week of bank earnings is wrapping up today with results from several regional banks. Shares of Regions Financial (RF) were down 4% in premarket trading after the bank's results came in weaker than expected, while State Street (STT) shares fell 2% after the release of its quarterly numbers. Shares of PNC Financial Services (PNC) rose about 3% after it beat estimates and said it plans to increase its level of stock buybacks, while M&T Bank (MTB) shares inched higher. Results from major commercial banks earlier in the week—including JPMorgan Chase (JPM), Wells Fargo (WFC), Citigroup (C) and Bank of America (BAC)—painted a mixed picture. Results yesterday from Morgan Stanley (MS) and Goldman Sachs (GS) topped estimates, as Wall Street trading and dealmaking provided a boost.

Shares of J.B. Hunt Transport Services (JBHT) sank Friday morning, a day after the logistics and shipping company reported a 2% decline in fourth-quarter revenue. The company said the decline was primarily driven by decreases in revenue per load and total number of shipping loads for some of its segments. Profits did manage to beat estimates compiled by Visible Alpha, with earnings per share coming in at $1.90. The trucking company said last year that it had concerns over tariffs affecting shipping demand, and that it was working to cut costs where it could. Shares were down more than 3% before the opening bell on Friday.

A number of Federal Reserve officials are scheduled to speak today, ahead of a decision later in the month on interest rates and amid concerns about Fed independence. The week opened with news that the Justice Department had subpoenaed the Fed over Chair Jerome Powell's testimony to Congress regarding the renovation of the Fed building. Powell called the investigation an act of political pressure, indicating it was retaliation for the Fed not lowering interest rates as much as President Trump has wanted. Fed officials and banking executives have said this week that any move to diminish the Fed's independent role in setting rates would likely end poorly and have a negative impact on the economy. The Fed's policy committee is set to make its next decision on interest rates on Jan. 28. After cutting the benchmark rate at each of its previous three meetings, market participants expect the Fed to stand pat this month, and some experts believe the central bank may not make any cuts at all in 2026.

Ready for a break? You're getting one: The 2026 trading holiday schedule starts in earnest next week.

Stock and bond markets will close for the first time since New Year's Day on Monday, Jan. 19, in observance of Martin Luther King Jr. Day, which commemorates the birth of the civil rights rights leader. The holiday itself is observed on the third Monday of January, though King's birthday was on Jan. 15. Regular trading resumes on Tuesday.

Here's the 2026 holiday trading schedule through the start of the summer:

• Monday, Feb. 16 (Presidents' Day/George Washington's birthday observed): Stock and bond markets closed
• Friday, April 3 (Good Friday)—Stock markets closed; bond markets close at noon
• Monday, May 25 (Memorial Day)—Stock and bond markets close; bond markets close at 2 p.m. on Friday, May 22

Several more trading holidays, starting with Juneteenth, are set to follow in 2026.

• Several members of the Federal Reserve's policy committee have spoken out against the White House's campaign to pressure the Fed to cut interest rates.
  
• Fed officials broke their customary taboo against commenting on political controversies after the Justice Department subpoenaed the Fed in an investigation of Chair Jerome Powell.
• The Trump Administration's hardball tactics could backfire, leading Fed officials to keep interest rates higher for longer to demonstrate the Fed's independence from White House control.
  

If the Trump Administration's investigation into Federal Reserve Chair Jerome Powell was intended to intimidate the central bank into sharply cutting interest rates, it's not going as planned.

At least four Fed officials who set interest rates spoke out this week in defense of Powell and the Fed's duty to make monetary policy decisions in the public interest rather than at the White House's command. Traders subsequently priced in lower chances of rate cuts early in the year.

Trump's Justice Department issued a subpoena to the Fed last week, seeking information about Powell's June 2020 Senate testimony in regard to the ongoing renovation of the Fed's headquarters. Powell denied wrongdoing and said the criminal investigation was part of Trump's long-running campaign to pressure the Fed to sharply cut its benchmark interest rate, which influences borrowing costs across many types of loans. Trump has denied knowing about the probe before the subpoena went out.

The eruption of the long-simmering feud between Trump and Powell complicates the Fed's dual mandate to keep inflation low and employment high, adding another consideration to the already challenging economic environment.

Several Federal Reserve governors and regional bank presidents backed up Powell's interpretation of events this week and said the Fed's independence from White House control is essential to its mission of keeping a lid on inflation using monetary policy. The outspoken comments were unusual because Fed officials usually make a point of avoiding commenting on political controversies.

The pushback could have implications for interest rates: experts have speculated that Fed officials could be more reluctant to lower the fed funds rate in the coming year if they feel inordinately pressured by the Trump administration to do so. Policymakers may decide that keeping interest rates higher for longer could signal the Fed's willingness to use monetary policy to fight inflation and bolster public confidence that the Fed will do what it takes to keep inflation under control despite political coercion.

"Any place where you don't have central bank independence, inflation comes roaring back," said Austan Goolsbee, president of the Federal Reserve Bank of Chicago, in an interview on NPR Wednesday. "We've spent the last five years fighting to get the inflation rate down, and that hasn't been easy. And if you're attacking the independence of the Fed, that makes that problem worse."

Traders were pricing in less of a chance of a rate in the January, March, April and June meetings on Thursday than they did the same time last week, according to the CME Group's FedWatch tool, which forecasts rate movements based on fed funds futures trading data.

For example, traders were pricing in a 78% chance that the Fed would keep rates steady at its March meeting on Thursday. That's up significantly from 58% penciled in at the same time last week—before news broke about the investigation.

Neel Kashkari, president of the Minneapolis Fed, and Fed governor Michael S. Barr made comments similar to Goolsbee's in media appearances this week. John C. Williams, president of the New York Fed, said in a speech that Powell “has proven himself to be a man of impeccable integrity."

In contrast, Fed Governor Stephen Miran dismissed concerns about the Fed's independence as "noise," speaking at an economic conference in Greece. Trump appointed Miran to the Fed governorship this fall. Miran currently serves as an economic advisor to Trump, although he has taken leave from that position while on the Fed's policy committee.

• Thursday is the last day in most states to enroll in Affordable Care Act plans for 2026.
  
• Enrollees are facing monthly payments that are more than double on average because Congress allowed a pandemic-era health care subsidy to expire.
  
• Households across the country are facing financial hardship due to premium hikes, and more are choosing to go without insurance.
  

On the final day to sign up for an Affordable Care Act plan for the year, people seeking health insurance must choose between paying skyrocketing premiums or risking financial catastrophe if they get sick.

Because of rising insurance premiums and the expiration of a pandemic-era government subsidy, ACA plan premiums in 2026 have doubled from 2025, forcing difficult decisions for the 45 million people enrolled in ACA-related plans. Thursday is the deadline to enroll in a 2026 health insurance plan through Healthcare.gov and many state-run marketplaces, while nine states and Washington, D.C., have extended the deadline to the end of January.

Efforts by lawmakers to remedy the situation have fallen short. A Democrat-sponsored bill to extend the subsidies passed the House of Representatives but was blocked by Republicans in the Senate on Wednesday. Republican proposals to overhaul the ACA by replacing subsidies with health savings accounts have similarly failed to gain traction.

As a result, people enrolled in ACA plans will have to pay on average more than double the premiums they would if the subsidies were extended, according to an estimate by KFF, a nonpartisan health care policy organization. The increase is more than $1,000 per year on average for the same coverage they had in 2025.

For some enrollees, the increases are much steeper. 

Heather Kory runs a consulting agency in Bay City, Michigan, that helps people and businesses choose and enroll in Affordable Care Act plans. The increases are "financially devastating" for about 15% of her clients, she said.

"It's enough to make their life not so comfortable," she said.

One couple, aged 58 and 60, with an annual income of $32,000, had been paying $88 a month for a plan with a $900 annual deductible, she said.

The expiration of the expanded health care subsidy means monthly health insurance payments will rise by hundreds, or in some cases thousands, of dollars, straining household budgets for millions of people.

The same plan for 2026 would cost them $1,935 a month, according to Kory. To stay insured, they downgraded to a plan with a $9,500 deductible and a $241 premium, more than double their previous premium. They had to sell some of their possessions to pay the higher bills, Kory said.

Lori Hunt, a Des Moines, Iowa, resident and breast cancer survivor, had her monthly premium increase to $90 from $8. Having recently lost her job at a nonprofit, Hunt said her budget is tight and she isn't sure how long she will be able to continue paying premiums.

"Luckily, I don't have a lot of prescriptions," she said. "I don't really have a chronic health condition like diabetes or something like that. So I'm very grateful for that. But you never know what can happen."

Kory said many of her clients can't afford the increased premiums for their silver-level plans and have been forced into bronze-level plans that have much higher deductibles.

"Let's say your child is in football and breaks his thumb, and then you go to the hospital, and you have to have the X-rays, and the doctors come in, the nurses come in," Kory said. "You're at a $4,000 bill, and that's just to set the finger again. So then you're out of pocket a whole $4,000 with no chance of having any kind of coinsurance until you reach that deductible."

And for many of her clients, meeting those multi-thousand-dollar deductibles is unrealistic.

If people do go to the hospital, they are banking on "trying to get financial assistance from the hospitals and doctors to help with their bill," Kory said.

A few of her clients have had to go without health insurance entirely.

That choice is becoming more common nationwide. As of Monday, 1.4 million fewer people had enrolled in ACA plans through Healthcare.gov than at the same point in 2025, according to the Department of Health and Human Services.

The number of health insurance dropouts is expected to rise, as people whose coverage was automatically renewed may not be able to afford the increased premiums. Kory anticipates a large drop-off starting in March.

"I think that a lot of them are going to just decide not to pay their bill and not to go forward with insurance," she said.

• Shares of chip manufacturing equipment suppliers and semiconductor designers soared on Thursday after strong results from contract chipmaker Taiwan Semiconductor Manufacturing Co. suggested demand for AI chips remains as robust as ever.
• The divide between AI haves and have-nots has widened this year as investors shift from buying AI aspirations to rewarding tangible AI-driven growth. 

Record earnings from contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSM) sparked big stock gains Thursday, suggesting there's still gas in the tank to fuel the AI rally.

TSMC on Thursday reported record quarterly profit of 505 billion new Taiwan dollars ($16 billion) on record revenue of more than NT$1 trillion ($33.1 billion). Both figures were well ahead of consensus estimates from Wall Street analysts. TSMC's U.S.-listed shares were up more than 5% in late-afternoon trading.

Wall Street's response to TSMC's results underscored investors' appetite for evidence of AI-driven growth. Shares of chipmaking equipment providers Applied Materials (AMAT) and KLA Corp. (KLAC) soared 7% and 8%, respectively, pacing S&P 500 advancers, after TSMC forecast it would increase its spending on equipment and infrastructure by at least 25% this year.

The AI trade stumbled in the finals months of 2025 as investors questioned the sustainability and wisdom of Silicon Valley's massive AI spending. Those concerns were on the back burner Thursday when TSMC's record results reinforced high expectations for companies with significant exposure to the AI data center buildout, including chip designers and data storage device makers.

TSMC's earnings and spending plans also signaled healthy demand for AI chips, boosting the stocks of designers such as Nvidia (NVDA), Advanced Micro Devices (AMD) and Broadcom (AVGO).

Wall Street's attitude toward AI has shifted over the past year. When once investors were happy to reward companies for their AI ambitions, Wall Street is increasingly looking for evidence that AI investments are delivering tangible financial benefits.

“As the investment cycle continues to mature, markets are likely to exemplify greater emphasis on monetization and earnings in 2026,” wrote Wedbush analysts in a research note on Thursday. Wedbush expects the market will be led this year by companies that can demonstrate AI-related spending is improving cash flows or profit margins.

That shift has produced a widening divide between the tech sector's haves and have-nots. The PHLX Semiconductor Index (SOX) is up 12% since the start of the year, propelled higher by stocks like Micron (MU) and Lam Research Corp (LRCX), whose top and bottom lines are being bolstered by AI demand. Shares of data storage device maker Sandisk (SNDK) have risen about 70% since the start of the year—more than double the return of the S&P 500’s next-best performing stock—amid insatiable demand for the storage and memory solutions required to operate the most powerful AI models.

Meanwhile, concerns about AI monetization have weighed on shares of software giants Intuit (INTU), ServiceNow (NOW) and Adobe (ADBE), which some investors worry may struggle to fend off AI-native competition and adapt their pricing models to a new tech paradigm. 

• Lori Calvasina, RBC Capital Markets' head of U.S. equity strategy, thinks continued earnings growth can power stocks higher in 2026.
• Analysts raised earnings expectations for the last three months of 2025 over the course of the fourth quarter—'a rare thing,' FactSet's John Butters said.

Can the S&P 500 post another year of double-digit returns? If it does, one market expert says, it'll earn it.

Some have warned that U.S. stocks can't post outsize gains forever. After a decade of posting exceptional performance, helped by a strong dollar and valuation expansion, the S&P 500's winning streak seems likely to stop or, at least, come under pressure—especially if big rate cuts aren't in the offing. But some analysts think the index has at least another good year in it.

The reason? Strong growth in corporate earnings. Lori Calvasina, RBC Capital Markets' head of U.S. equity strategy, sees the S&P 500 hitting 7750 in the next 12 months, implying upside of a little more than 11% from recent levels. At the end of 2025 that figure was 13%, she said, aligning with consensus earnings growth expectations at the time.

"We're not looking for multiple expansion. We're not looking for a big decline in the multiple," Calvasina told CNBC Thursday. "We think this market is going to get what it deserves, but from an earnings perspective."

While much of last year was dominated by concerns about mega-cap tech stocks' lofty valuations, this year, market experts see fundamentals (not sentiment) driving the S&P 500 higher.

RBC's price target, which the firm updates monthly, is underpinned by its assessment of investor sentiment; valuation and earnings per share; stocks' appeal relative to bonds; the macroeconomic backdrop; and monetary policy.

Signals from the current earnings season appear to shore up that forecast. Analysts have been more optimistic than usual in their earnings outlooks for the fourth quarter of 2025, raising their estimates over the course of those three months as opposed to lowering them. That's "a rare thing," FactSet's John Butters said in an interview with financial media show MRKT Call yesterday.

The estimated growth rate for the fourth quarter has risen to 8.1% from 7.2% at the end of September, he said.

The tech sector saw the biggest jump in earnings per share revisions, Butters said, with some of the Magnificent Seven—such as Nvidia (NVDA), Microsoft (MSFT), and Apple (AAPL)—driving those upward changes.

DataTrek's Nicholas Colas and Jessica Rabe said the only times over which analysts raised their quarterly estimates higher during a reporting period was in the first three quarters of 2021, and in the last two of last year. Because analysts tend to lower, rather than hike, their estimates, "this makes the last two quarters somewhat remarkable, and in our view supportive of current high S&P 500 valuations," they wrote earlier this week.

• Experts, including former Fed chairs and the CEO of America's largest bank, warn that President Trump's efforts to pressure the central bank into lowering interest rates could backfire.
• They argue the loss of Fed independence would cause inflation expectations to rise and cause Treasury yields, which influence interest rates across the economy, to soar.

President Donald Trump has long complained that interest rates are too high. Experts say his pressure campaign against the Federal Reserve isn't helping him.

While Trump and Powell have have a bumpy public relationship, this weekend's affairs—Fed Chair Jerome Powell said the Justice Department had opened a criminal investigation into whether he lied to Congress while testifying last year on the costs of renovating Federal Reserve headquarters—marked an escalation. Powell called the investigation politically motivated and “a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.”

The administration has sought to pressure the Fed, which operates independently of the White House, to aggressively lower interest rates. Policymakers gradually cut rates last year to support a weakening labor market, but have rebuffed calls to move faster, worried it might fuel inflation. Most Fed watchers expect some cuts this year, though not as many as Trump might prefer.

Market measures of inflation expectations inched higher this week, but didn’t jump, suggesting investors don’t see the investigation having a major effect on rates. That cool has alarmed some observers: Former Fed Chair and Treasury Secretary Janet Yellen on Monday morning told CNBC she was "surprised the market isn’t more concerned."

The Federal Reserve's independence from political pressure is widely seen as essential for sound monetary policy, which sometimes requires policymakers to make painful decisions for the sake of long-term stability. President Trump's effort to bring the central bank under his control risks undermining confidence in U.S. policy, some experts say.

Meanwhile, the outcome of the probe remains an open question, with several experts wondering if it might have an effect opposite to what Trump would likely prefer.

“The criminal investigation into Federal Reserve Chair Jerome Powell is unlikely to influence the path for monetary policy, and could even backfire by making officials more reluctant to cut rates in the coming months and years,” wrote Bernard Yaros, lead U.S. economist at Oxford Economics, on Monday. 

JPMorgan Chase CEO Jamie Dimon on Tuesday said “anything [that] chips away at [Fed independence] is probably not a great idea, and in my view, will have the reverse consequences. It’ll raise inflation expectations and probably increase [interest] rates over time,” said Dimon. (Trump in response called Dimon "wrong.")

All three living former Fed chairs are among 14 policymakers spanning the political spectrum who signed onto a statement warning the loss of central bank independence would undermine faith in U.S. monetary policy, upending the domestic and global financial systems.

“This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly,” the statement read. “It has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success.”

Many experts believe the investigation has increased the odds that Powell stays on as a Fed governor after this term as chair ends in May. (Governors serve 14-year terms, while chairs serve for four years. Fed chairs are, by law, always Fed governors, and are allowed to remain governors after their tenure as chair ends.) On prediction market Kalshi, the perceived odds of Powell leaving the Fed before August plummeted on Sunday; they have since recovered to about 66%.

“By remaining on the Board, Powell would limit the scope to which the president could reshape the central bank's composition, as the new chair would instead have to take current Fed Governor Stephen Miran's seat,” according to Yaros. Trump appointed Miran, a White House advisor closely aligned with the president, last year to complete the term of Governor Ariana Kugler, who resigned. Kugler’s term ends on Jan. 31. 

Investors could also be a check against politics influencing monetary policy, says Yaros. In the short-term, any loss of Fed credibility could spark a Treasury sell-off, causing yields, which influence an array of consumer and commercial interest rates, to skyrocket. (Bond yields have ticked lower this week.)

In the long term, economic models suggest politically motivated rate cuts would juice economic growth, but also stoke inflation and cause market-based interest rates to rise, “leaving a future Fed with no good options to return inflation back to target,” says Yaros.

Yaros expects an upcoming Supreme Court decision to be more meaningful for the Fed’s independence than the Powell matter. The court will next week hear oral arguments to determine if Trump has the authority to remove Fed Governor Lisa Cook, whom he attempted to fire last year over disputed allegations of mortgage fraud. 

“A ruling against Cook would open the door for current and future administrations to stack the central bank,” said Yaros. 

• Taiwan Semiconductor Manufacturing Co. reported quarterly results that topped analysts' estimates, with revenue setting another record high.
• The chipmaker's stock and others in the semiconductor industry surged Thursday following the results.

Semiconductor stocks rallied Thursday morning, after stronger-than-expected results from an industry giant pointed to growing demand for AI hardware.

Taiwan Semiconductor Manufacturing Co. (TSM), the largest contract chipmaker in the world, said Thursday that it generated record revenue of 1.05 trillion New Taiwan dollars ($33.73 billion) in the fourth quarter, with profits of $3.14 per American Depositary Receipt. Both figures topped Wall Street estimates compiled by Visible Alpha.

TSMC's U.S.-listed surged over 6% to a record high Thursday morning. Shares of Dutch chip equipment maker and TSMC supplier ASML (ASML) also jumped 6%. Nvidia (NVDA), AMD (AMD), Micron Technology (MU), Broadcom (AVGO) and other semiconductor stocks climbed as well.

TSMC has been one of the biggest beneficiaries of the AI boom, as its position as the dominant semiconductor manufacturer in the world has driven its revenue to record highs. The company makes chips designed by a number of AI heavyweights such Nvidia and Advanced Micro Devices, and its results could be taken as a signal of strong AI demand.

TSMC CFO Wendell Huang said the quarter's results reflected strong demand trends that are expected to continue this year, and CEO C.C. Wei said developments in the market for AI products "continue to be very positive" for the company's business, according to a transcript provided by AlphaSense.

"Looking ahead, we observe increasing AI model adoption across consumer, enterprise and sovereign AI segment. This is driving need for more and more computation, which supports the robust demand for leading-edge silicon," Wei said.

With Thursday's gains, TSMC shares have gained close to 65% in the last 12 months.

• Some experts have cast doubt on the expectation that the Federal Reserve will cut its key interest rate in 2026.
  
• December's lower unemployment rate and persistent high inflation have taken the pressure off the Fed to cut rates.
  
• The Trump administration's demand for lower rates and its use of hardball legal tactics against Fed leaders could spark a backlash among members of the Fed's policy committee.
  

Interest rate cuts by the Federal Reserve in 2026 seemed like a foregone conclusion not long ago, but several experts are casting doubt on that assumption.

J.P. Morgan Chief Economist Michael Feroli is among the more prominent forecasters who don't expect the Fed to make any cuts this year.

"If you look at financial markets or GDP growth, it doesn't really feel like rates are restrictive when we see how strong those variables are performing," Feroli said in an interview Wednesday on CNBC. He cited retail sales numbers that were released early Wednesday as the latest sign of economic strength. "I think the case for a cut in the near term is pretty weak."

Feroli's prediction goes against the expectation of financial market participants, who are pricing in a likelihood of two quarter-point cuts in the Fed's benchmark rate in 2026, according to the CME Group's FedWatch tool, which forecasts rate movements based on fed funds futures trading data.

In their latest quarterly projections last month, the Fed's seven governors and the presidents of the 12 regional Fed banks penciled in an expectation on average of a single quarter-point cut this year, which would bring the key federal funds rate to a range of 3.25% to 3.5%. At the time, eight projected no more than two quarter-point cuts in 2026, while four called for more-aggressive reductions, and seven were leaning against any adjustments.

While it's unclear how the thinking of the policy-setting Federal Open Market Committee may have changed, the economic scenario since December has evolved in ways that are prompting some prominent voices to suggest further rate cuts may not be coming any time soon. (The FOMC comprises the seven Fed governors and a rotating group of five regional Fed presidents.)

The Fed’s interest rate decisions shape borrowing costs across the economy, influencing everything from mortgage rates to business investment. If rate cuts fail to materialize in 2026, households and companies could face higher financing costs for longer, slowing economic growth.

Fed officials lowered the fed funds rate by three quarters of a point in late 2025 amid fears that the recent job market slowdown could turn into a surge of unemployment. Lower interest rates are meant to stimulate economic activity and hiring.

The Fed, which has a dual mandate to keep employment high and maintain price stability, has kept rates at higher-than-usual levels in recent year to push down inflation, which has been above the central bank's target of a 2% annual rate since 2021. A higher fed funds rate raises borrowing costs on all kinds of loans, which in turn reduces borrowing and spending, helping mute inflation.

There are three major reasons Feroli and other experts have begun to cast doubt on expectations that further rate cuts are on the horizon.

First, despite slow hiring, the unemployment rate fell slightly to 4.4% in December, which took some of the pressure off of the Fed to cut rates and save the job market.

That's one reason Feroli cites for taking his previous forecast for rate cuts off the table for 2026. The unemployment rate "isn't looking quite as worrisome as it was, let's say, a few months ago," Feroli said Wednesday.

David Doyle, head of economics at Macquarie Group, agrees, telling Morningstar last week that "our view is that the data will guide them toward not cutting."

Second, while inflation was cooler than expected in December, it's still well above the Fed's goal and has shown little sign of cooling any time soon, former Boston Fed President Eric Rosengren told Bloomberg TV Tuesday.

Feroli said he expects the upcoming release of the Personal Consumption Expenditures Index, which is the Fed's preferred measure of inflation, to show that annual inflation is above 3%.

Finally, it's possible that President Donald Trump's pressure on the Fed to sharply lower interest rates could backfire. Trump has demanded the Fed cut interest rates, and his Justice Department has launched a criminal investigation of Fed Chair Jerome Powell.

Those hardball tactics could make Powell and other Fed officials inclined to defy Trump in order to defend the central bank's independence.

For example, Powell, who denounced Trump's "intimidation" last week, is now more likely to stay on as a governor after his term as Chair ends in May to help protect the Fed's independence, Krishna Guha, vice chairman at Evercore ISI, wrote in a note Sunday, CNBC reported.

Former Fed president Rosengren said rate cuts this year aren't guaranteed—even if Trump gets a new, pro-rate-cut Fed Chair confirmed by the Senate.

"It's still not a slam dunk, even with a new Fed Chair, that rates actually decline," he added, "particularly if the administration's jawboning and potential legal challenges raise concerns about Federal Reserve independence and some of the voting members want to be sure that the economic conditions justify a move," he said.