In December 2025, the Federal Reserve announced that it would lower the target range of the federal funds rate by 25 basis points to 3.5%-3.75%, completing the third consecutive interest rate cut during the year. Although this adjustment is in line with general market expectations, the deep signals released by the meeting - intensified differences within decision-makers, blurred policy guidance, and shifts in balance sheet operations - reveal that global monetary policy is moving from "coordinated easing" to a new stage of "multi-speed parallelism." Wmax The market observation team sorted out the core mechanism of this interest rate meeting and its impact on cross-asset pricing based on public information.

Cracks in decision-making: 9:3 vote result reveals policy dilemma

The interest rate resolution was passed with 9 votes in favor and 3 against, with the number of dissenting votes hitting a new high since 2019. What is even more noteworthy is that the three dissenting votes showed obvious polarization: Governor Milan advocated a more radical 50 basis point interest rate cut, while Kansas City Fed President Schmid and Chicago Fed President Goolsby insisted on "no action." This confrontation between "doves think it's not enough and hawks think it's too much" reflects the Fed's judgment dilemma under the dual pressures of "sticky inflation" and "slowing employment."

Chairman Powell admitted at the press conference that he was currently facing a "rare conflict between two goals at the same time." This statement directly weakened the coherence of policy guidance. In this context, although the latest dot plot shows that the median interest rate will be cut only once in 2026, the individual forecasts of 19 officials are highly dispersed: 8 people predict multiple interest rate cuts, some even pointing to an extremely low level of 2%; 7 people advocate stopping interest rate cuts, and 3 of them clearly support raising interest rates. This rare disagreement is partly due to the lack of official data in October and November due to the U.S. government shutdown, forcing decision-makers to rely on unofficial indicators to "make decisions blindfolded."

Balance Sheet Turn: Technical Operations Trigger Loose Trading

In addition to interest rate adjustments, another key trend at the meeting was the launch of a short-term government bond purchase plan of approximately US$40 billion in the first month. The Fed emphasized that this move is only to maintain sufficient bank reserves and is a "technical operation" and has nothing to do with quantitative easing (QE). However, the market clearly interpreted this as an implicit liquidity injection.

Historical experience shows that regardless of the original intention, the Fed's balance sheet expansion usually results in actual liquidity support. This signal was quickly priced in by the market: the three major U.S. stock indexes collectively rose, with the Dow rising nearly 500 points; the 10-year U.S. bond yield fell 3 basis points to 4.153%; the U.S. dollar index fell back to 98.66; spot gold rose to $4,236.57 per ounce. The logic of asset linkage is clear - when the policy path is unclear, investors choose to focus on the relatively certain liquidity clue of "balance sheet expansion", forming a typical "easy trading" pattern.

Global fragmentation: The unifying anchor disappears and cross-border volatility intensifies

The Fed's dilemma is not an isolated phenomenon, but a microcosm of the policy divergence of major central banks around the world. The "Super Central Bank Week" at the end of 2025 shows that the European Central Bank has suspended interest rate cuts, the Bank of England has become cautious due to the stickiness of inflation, and the Bank of Japan has firmly promoted interest rate increases and exited ultra-loose. From the "same-way easing" in the past two years to the current "multi-speed parallelism", global monetary policy has lost its unified anchor.

This shift means that cross-border capital flows in 2026 will be more sensitive to fundamental differences and misaligned policy rhythms among economies. For emerging markets, moderately loose US dollar liquidity may provide a breathing window, but asset performance will depend more on endogenous growth momentum, the progress of structural reforms and the degree of geo-risk mitigation, rather than solely relying on the spillover from the Federal Reserve policy.

Political Variables: Expectations of Chairman Change Disturb Policy Independence

Another potential source of disturbance comes from changes in political ecology. Current Chairman Powell's term will end in May 2026, and Hassett, director of the White House National Economic Council, is regarded as a popular replacement. As a former Trump administration official, his dovish stance has triggered market concerns about the independence of the Fed's policy.

The "shadow chairman" transition period from the announcement of the nomination in January 2026 to the official handover in May may lead to confusion in policy signals, and even a situation where the influence of the current chairman is weakened in advance. If the White House applies pressure for more aggressive easing, it may trigger a bond market turmoil similar to the UK's "Trust Moment" - in which long-term interest rates rise instead of falling due to damage to fiscal credibility.

Conclusion: Fluctuations originate from mechanisms, not directions

The Federal Reserve meeting in December 2025 is, on the surface, a routine interest rate cut, but in reality it is a landmark event that marks the ebb of policy certainty. Internal disagreements in decision-making, judgment difficulties due to lack of data, implicit balance sheet easing, and the risk of political intervention will together constitute the core mechanism of global market fluctuations in 2026. For market participants, the key is not to bet on the end point of interest rates, but to understand the logic of generating policy signals, track the divergence rhythm of global central banks, and identify the sensitivity structure of different assets to liquidity and fundamentals.

When monetary policy shifts from technical judgment to political gaming, volatility itself has become the new normal.