The market now basically sees a 25bps rate cut in December as a done deal, with pricing almost at 100%. Powell doesn’t have much room to maneuver this time—the real focus should be on the dot plot update and what he says at the press conference.

December last year was actually quite similar to now—a rate cut landed, plus Trump’s election win, and market sentiment was high. But Powell directly slashed most of the rate cut expectations for 2025 at the press conference, which immediately took the market down.

But what actually happened in 2025? Four rate cuts, totaling 100bps, far exceeding the dot plot guidance at the time. So the Fed says one thing, but when it comes time to act, it still depends on the economic data. If the data keeps weakening, even if inflation is just hovering at low levels, they’ll have to cut rates.

Where are the risks now? Leading indicators like ISM Manufacturing and JOLTS job openings have been dropping for several months, and the market is starting to bet on the possibility of a soft landing or even a mild recession in 2026.

But looking at it from another angle, as long as there are clear signs of a significant slowdown in the US economy in the first half of 2026, the Fed will ultimately return to the “growth support” path. The actual number of rate cuts will likely exceed the dot plot forecast again.

On top of that, Trump has clearly stated his preference for a low interest rate environment, so 2026 really could become a “big year for rate cuts.” At that point, both US stocks and the crypto market should see some solid opportunities.