# Fed Holds Rates — Inflation Back in Focus | Prof G Markets

Source: https://www.youtube.com/watch?v=0MKKI98Dm00
Recap page: https://rapidrecap.app/video/0MKKI98Dm00
Generated: 2026-01-29T12:35:06.465+00:00

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## Quick Overview

The Federal Reserve held interest rates steady on January 29th, as expected following three consecutive cuts last year, while noting that the outlook for economic activity has improved, inflation remains somewhat elevated, and the labor market is stabilizing, leading to an expectation that future rate cuts will be based on inflation data rather than labor market concerns.

**Key Points:**
- The Federal Reserve held interest rates unchanged on January 29th, marking the end of a streak of three consecutive cuts from the previous year.
- Fed Chair Jerome Powell stated that the outlook for economic activity has improved since the last meeting, with stabilizing job market signs.
- The Fed noted that inflation remains 'somewhat elevated' relative to their 2% target, which influences their cautious approach to future rate cuts.
- The 10-year Treasury yield increased, and oil prices climbed after President Trump warned Iran about a 'massive armada' following an attack.
- Tesla stock rose after hours due to a better-than-expected Q4 report, despite full-year revenue dropping for the first time in company history.
- Morgan Stanley economist Michael Gapen characterized the Fed's hold as a 'hawkish hold' rather than a dovish one, suggesting they are not yet ready to ease policy based on inflation alone.
- The discussion highlighted ongoing investor concern about the sustainability of US fiscal policy and the strength of the dollar, contrasting with the strong performance of AI-related stocks like Microsoft and Nvidia.

![Screenshot at 00:11: 05:The on-screen text summarizes the Reuters headline: "Fed Leaves Rates Unchanged, Sees 'Elevated' Inflation and Stabilizing Job Market," setting the context for the central economic news discussed in the segment.](https://ss.rapidrecap.app/screens/0MKKI98Dm00/00-00-11.jpg)

**Context:** This news segment from Prof G Markets, hosted by Ed Elson on January 29th, 2026, reviews the day's major market movements, focusing heavily on the Federal Reserve's decision regarding interest rates and the subsequent commentary from Fed Chair Jerome Powell. The discussion also touches upon geopolitical events affecting oil prices and major tech earnings from companies like Tesla, Microsoft, and Meta, with an expert guest, Michael Gapen, providing analysis on the Fed's cautious stance amidst mixed economic signals.

## Detailed Analysis

The video reports that on January 29th, the Federal Reserve decided to keep interest rates steady, ending a sequence of three consecutive cuts from the prior year. Fed Chair Jerome Powell indicated that the economic outlook has improved, and the labor market is stabilizing, but inflation remains somewhat elevated compared to the 2% target. This cautious stance suggests that future rate cuts will depend on clearer signs of disinflation, not just labor market cooling. Market reactions included the 10-year Treasury yield increasing and oil prices rising following a warning from President Trump to Iran regarding military action. In corporate news, Tesla's stock initially dipped despite beating Q4 expectations because full-year revenue declined for the first time in its history; however, the stock later recovered. Microsoft and Meta reported strong earnings, with Microsoft's revenue up 17% year-over-year, though Microsoft's cloud growth was slightly lower than the previous quarter. Guest Michael Gapen, Chief US Economist at Morgan Stanley, described the Fed's stance as a 'hawkish hold,' emphasizing that the Fed is hesitant to signal rate cuts until inflation is clearly trending toward the target. Gapen also noted that the market's focus on AI strength (highlighting Microsoft and Nvidia) and concerns over long-term US fiscal policy and the dollar's devaluation are key underlying themes. Finally, the segment discussed Adobe's earnings, noting its stock fell 50% from its 2021 peak due to slowing revenue growth (now around 10% vs. 20% previously) and emerging competition from Figma and Canva, despite Adobe's strong gross margins (90%+).

### Federal Reserve Decision

- Rates held steady after three consecutive cuts last year
- Powell noted improved economic outlook, stabilizing job market, but 'somewhat elevated' inflation
- Fed signaled future cuts depend on inflation progress, not just labor market cooling.

### Market Movers

- 10Y Treasury yield increased
- Oil prices climbed following Trump's warning to Iran regarding 'massive armada'.

### Tech Earnings Highlights

- Tesla Q4 sales beat expectations, but full-year revenue dropped for the first time in company history; Microsoft revenue up 17% YoY, but cloud growth slightly slower; Meta Q4 sales up 24% YoY.

### Analyst Commentary (Michael Gapen)

- Fed adopted a 'hawkish hold'
- Fed is not signaling rate cuts based on labor market alone
- Market is nervous about US fiscal policy, dollar devaluation, and AI hype vs. fundamentals.

### Adobe Analysis

- Stock down 50% from 2021 peak
- Revenue growth slowed to ~10% (from 20%)
- Faces strong competition from Figma and Canva, both heavily investing in AI.

### Adobe Valuation & Fundamentals

- Stock trades at 18x forward earnings (low for its history)
- Gross margins remain high at 90%
- AI is driving some growth, but high CAPEX spending raises questions about sustainability.

![Screenshot at 00:01: 29:The video introduces the discussion on the Fed's rate decision and upcoming tech earnings.](https://ss.rapidrecap.app/screens/0MKKI98Dm00/00-00-01.jpg)
![Screenshot at 00:35: 15:A graphic displays the key market indicators for the day, showing the 10Y yield and Oil up, while the Dow was flat following the Fed announcement.](https://ss.rapidrecap.app/screens/0MKKI98Dm00/00-00-35.jpg)
![Screenshot at 01:06: 10:A Reuters news ticker overlay reports the Fed left rates unchanged, citing 'Elevated' Inflation and a Stabilizing Job Market.](https://ss.rapidrecap.app/screens/0MKKI98Dm00/00-01-06.jpg)
![Screenshot at 01:39: 23:The interview begins with expert Michael Gapen discussing the Fed's decision and market expectations.](https://ss.rapidrecap.app/screens/0MKKI98Dm00/00-01-39.jpg)
![Screenshot at 03:55: 10:The host discusses investor concerns regarding the stability of the USD and overall market volatility.](https://ss.rapidrecap.app/screens/0MKKI98Dm00/00-03-55.jpg)
![Screenshot at 19:41: 21:A graphic highlights Microsoft's revenue growth of +17% YoY, noting that its AI/Cloud segments are performing well.](https://ss.rapidrecap.app/screens/0MKKI98Dm00/00-19-41.jpg)
![Screenshot at 32:28: 28:A graphic illustrating Adobe's stock performance shows a 50% drop from its peak two years prior.](https://ss.rapidrecap.app/screens/0MKKI98Dm00/00-32-28.jpg)
![Screenshot at 36:38: 10:A graphic states that over 80% of creators will use AI as of 2025, highlighting the AI narrative discussed.](https://ss.rapidrecap.app/screens/0MKKI98Dm00/00-36-38.jpg)