After yesterday's meeting of the US Federal Reserve, the headlines of leading media were filled with the thesis that the American regulator "turned on the printing press." However, the real content of Jerome Powell's statements is much more complex. Below is a detailed analysis based on actual quotes and market reactions.
The rate is in the neutral zone and there are no plans for further reductions.
Powell stated that previous rate cuts were solely related to the weakening labor market. The last move of 25 b.p., according to him, brought the rate into the neutral zone. This means that the Fed does not plan any new cuts in the coming months.
Treasury bond buyback: technical liquidity, not a new QE
The Fed announced the start of a significant bond buyback — the first operation will amount to $40 billion on December 12. Powell emphasized that this is not the launch of stimulus programs and does not serve to accelerate the economy.
The goal is technical management of internal reserves, and the volumes of buyback are planned to be reduced further.
Liquidity in the system will increase, but this is not a printing scale of 2020–2021, but merely a tool to avoid short-term disruptions.
The U.S. economy is already feeling problems.
Such technical interventions by the Fed have historically appeared precisely at moments when the economy was transitioning into a phase of deterioration. The regulator has effectively acknowledged the rise of systemic risks and is attempting to mitigate potential shocks.
A full reversal of monetary policy is ahead. Often before this, the Fed publicly warns markets against excessive optimism. After this, a shock decline in risky assets usually occurs, and only then does true easing begin.
Regulation: an important decision unnoticed by the market
The U.S. Office of Currency Control has officially allowed national banks to conduct cryptocurrency intermediary operations.
In the previous cycle, banks effectively avoided crypto, fearing sanctions. Now the situation is changing radically:
Banks are gaining the ability to provide crypto services.
A 'conservative and safe bridge' is being created between traditional finance and crypto.
In the future, any American will be able to buy crypto assets in just a few clicks.
This lays the foundation for the arrival of mass liquidity when a favorable macroeconomic phase begins.
Conclusion
The market is in a zone of increased uncertainty. The Fed effectively acknowledges the deterioration of the economic backdrop, but has not yet launched full-fledged stimuli. The crypto market may continue painful 'dilutions', but such phases usually precede significant trending movements.
