Bitunix Analyst: Fed's "hawkish rate cut" sends mixed signals, internal divisions intensify, and the market reprices the 2026 policy path.

On December 11, the FOMC cut interest rates by another 25 basis points to 3.50%-3.75%, marking the third consecutive rate cut. However, three dissenting votes revealed a widening divergence in policy direction. The statement added the phrase "considering the magnitude and timing of further adjustments to interest rates" and removed the description of the "low" unemployment rate, reflecting a growing rift among officials regarding employment risks and the stickiness of inflation. Starting December 12, the Federal Reserve will purchase $40 billion in Treasury bills over 30 days.

Following the meeting, Powell emphasized that inflation is currently near the upper end of the neutral range, and no one expects a rate hike at this point. He also pointed out that upside risks to inflation remain, but are mainly driven by tariffs. If tariffs reverse, inflation could fall back to the lower end of the 2% range. Regarding the labor market, he acknowledged that recent data has been overestimated, and there are downside risks to employment. The market expects a cumulative rate cut of 55 basis points next year, and the probability of another rate cut in January remains less than 25%.

Major institutions are increasingly divided on future policy: some believe improved inflation is sufficient to support another rate cut starting in March next year, while others expect a pause in January, a wait-and-see period in the first half of the year, and even believe that rate cuts may be delayed until after June. Several Wall Street institutions have pointed out that this "hawkish rate cut" highlights the difficulty for the FOMC under Powell's leadership to maintain consensus. In terms of market performance, gold and silver prices fluctuated significantly before strengthening during the period between the Fed's statement and the press conference, with silver reaching a record high; US Treasury yields fell, the dollar weakened, non-US currencies rebounded across the board, and US stocks rose in tandem. Trump's post-meeting criticism of the insufficient rate cut added external noise to policy uncertainty.

Bitunix analysts believe that amid uncertainty surrounding the pace of interest rate cuts, escalating internal divisions, and a potential leadership change in 2026, the market will rely more heavily on data and liquidity operations to price policy paths. Short-term volatility is likely to increase, and directional signals will require further clarification on employment and inflation.