The Fed seeks a pivot to interest rates at upcoming meeting after DOJ subpoenas and political drama

"The central bank's interest rate-setting committee is almost certain to keep its key short-term rate unchanged at about 3.6%, after three straight quarter-point cuts last year. Fed Chair Jerome Powell said after December's meeting that they were "well positioned to wait to see how the economy evolves" before making any further moves. When the Fed lowers its short-term rate, it can over time influence other borrowing costs for things like mortgages, auto loans and business borrowing, though those rates are also affected by market forces."

"This week's meeting - one of eight the Fed holds each year - will be overshadowed by the bombshell revelation earlier this month that the Justice Department has subpoenaed the Fed as part of a criminal investigation into testimony Powell gave last June about a $2.5 billion building renovation. It's the first time a sitting Fed chair has been investigated, and prompted an unusually public rebuke from Powell."

"Powell said Jan. 11 that the subpoenas were "pretexts" to punish the Fed for not cutting rates as sharply as Trump wants. Powell will be "under even more pressure to underscore, 'everything we're doing here ... is all about the economics,'" said Claudia Sahm, a former Fed economist and chief economist at New Century Advisors. 'We didn't think about the politics.'"

The Federal Reserve is expected to keep its key short-term rate unchanged at about 3.6% after three quarter-point cuts last year. Fed Chair Jerome Powell said the central bank was well positioned to wait and see how the economy evolves before making further moves. Lowering the short-term rate can over time influence mortgages, auto loans and business borrowing, though market forces also affect those rates. This week's Fed meeting will be overshadowed by a Justice Department subpoena related to Powell's testimony about a $2.5 billion building renovation, marking the first investigation of a sitting Fed chair. Powell called the subpoenas "pretexts" and faces pressure to emphasize economic rather than political motives.

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