Behind the Federal Reserve's 25-basis-point rate cut: three dissenting votes and increasing market divergence

【Blockchain Rhythm】The rate cut on December 11th appears to follow the script with a 25 basis point decrease (bringing it to 3.50%-3.75%), the third consecutive cut. But internally, disagreements have already surfaced—three dissenting votes directly brought the divisions to the surface. More importantly, the statement wording has changed: it now includes “considering further adjustments of the pace and timing,” and the phrase about the unemployment rate being “relatively low” has been removed. What do these two changes imply? Officials’ judgments on employment and inflation are no longer aligned.

Powell’s post-meeting remarks are actually quite subtle. On one hand, he says we are now close to the upper end of the neutral interest rate, and no one expects further rate hikes; on the other hand, he admits inflation still faces upside risks, mainly due to tariffs acting up. However, he left some room for flexibility—if tariff policies reverse, inflation could return to the lower end of the 2% target range. He also acknowledged that recent employment data has been overestimated in the past few months, with actual risks skewing downward. How does the market view this? Expectations for a total of 55 basis points of rate cuts next year have risen, but the probability of another cut in January is less than one-quarter.

Major institutions are also offering different views. Some believe the inflation improvement is sufficient for further cuts as early as March; others think January will see a pause, with a wait-and-see approach in the first half of the year; more conservative analysts predict rate cuts might not come until after June. Wall Street generally criticizes this as a “hawkish rate cut,” and Powell’s team is increasingly difficult to keep unified.

The market response has been quite lively. From the release of the statement to the press conference, gold and silver first experienced intense volatility, then continued to surge, with silver even hitting a historical high. US Treasury yields fell, the dollar weakened, and non-US currencies rebounded collectively. US stocks also rose. After Trump’s comments criticizing the insufficient rate cut, additional noise was added to an already uncertain policy environment.

From an analyst’s perspective at a certain exchange: the pace of rate cuts is unclear, internal disagreements are evident, and with the leadership potentially changing in 2026, the market will focus more on data and liquidity operations to gauge policy direction. Short-term volatility is likely to increase, and clearer signals will depend on further clarity in employment and inflation data. The $40 billion Treasury purchase plan starting December 12 is also a window to observe liquidity conditions.