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Breaking News: Fed Rate Cut Tonight Highly Likely, How 'Politicization' of Monetary Policy Is Reshaping Central Bank Actions Set to Be Key Focus
BlockBeats News, December 10th. Tonight, the Fed's final monetary policy meeting of the year arrives. The interest rate decision will be announced at 3:00 AM Thursday (UTC+8), with Fed Chair Powell holding a monetary policy press conference at 3:30 AM (UTC+8). According to CME FedWatch, the probability of a 25 basis points rate cut is 87.6%, making a rate cut tonight quite likely. However, the Fed's key focus this week is not on the rate cut itself but on whether to inject new liquidity into the market and how the "politicization" of Fed officials' diverging views will reshape the monetary policy path for 2026.
The market is watching closely to see if the Fed will signal balance sheet expansion after the rate decision. With the balance sheet runoff quietly halted, how the Fed manages its massive balance sheet and whether it will inject new liquidity into the market are crucial questions. Last Friday, Bank of America's global rates strategy team stated that they expect the Fed to announce this week that starting in January, they will purchase Treasury securities with maturities of one year or less at a pace of $45 billion per month as part of "reserve management operations."
This week's Fed meeting is expected to be one of the most controversial in recent years, more like a "political stress test." The policymakers' divergence on the outlook for rate cuts will reshape the monetary policy landscape for the US in 2026. Of the 12 voting members of the Federal Open Market Committee (FOMC), 5 have expressed opposition or skepticism toward further monetary policy easing, while 3 members support a rate cut. This further reinforces the market's narrative that the Fed is becoming increasingly politicized. Since 2019, the Fed's policy committee has never seen three or more dissenting votes in a single meeting, a situation that has occurred only nine times since 1990.
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