《December 10th Federal Reserve Night: Rate Cuts Set in Stone, What Kind of Storm Will New Liquidity and Political Disagreements Ignite?》

On the evening of December 10th, the Federal Reserve's last monetary policy meeting of the year will take place, with the interest rate decision being announced at 3 AM (Beijing time) on Thursday. Half an hour later, Federal Reserve Chairman Powell will hold a press conference to discuss monetary policy matters. The CME FedWatch tool indicates that the probability of a 25 basis point rate cut is as high as 87.6%, so it seems that a rate cut tonight is basically a done deal.

However, the main event for tonight's Federal Reserve meeting is not actually the rate cut, which is not the most attractive part. What everyone is more concerned about is whether the Federal Reserve will add some “fuel” to the market, i.e., release new liquidity, and the increasing disagreements among Federal Reserve officials—will this affect the direction of monetary policy in 2026? That is the new focus.

The market is now fixated on the Federal Reserve, watching to see if they will mention “expanding the balance sheet” after their interest rate decision. The Federal Reserve had quietly stopped reducing their balance sheet, and now the question is how they will manage that massive balance sheet and whether they will inject some liquidity into the market—that is the key. The global interest rate strategy team at Bank of America mentioned last Friday that they speculate the Federal Reserve will announce this week that starting in January, they will purchase $45 billion worth of one-year or shorter Treasury bills each month, citing “to manage reserves.”

This week’s Federal Reserve meeting is expected to be one of the most controversial in recent years—a true “political stress test.” Policymakers are divided on the issue of rate cuts, which will certainly impact U.S. monetary policy in 2026. You see, among the 12 voting members of the Federal Open Market Committee (FOMC), 5 oppose or doubt further easing of monetary policy, while the 3 board members support a rate cut. This indicates that the Federal Reserve is becoming increasingly “politicized.” Since 2019, the policy committee has not seen three or more dissenting votes in a single meeting; this has only happened nine times since 1990, and it looks like this time it will break the record. If you are still confused about how to operate? Click on my profile and follow me. This round of the market will still explode with more 100x coins; random guessing is not as good as participating in the chat room! #美联储降息