The market exploded as soon as the Federal Reserve's December meeting minutes were released. The third rate cut of the year was carried out as planned, with the interest rate range set at 3.50%-3.75%, but the voting results showed a split of 9:3—these 3 dissenting votes directly exposed the true internal struggle. On one side are concerns about inflation rebound, and on the other side are signals of soft employment data; even officials supporting the rate cut openly admit this is a "delicate balance." At a different point in time, some votes might have flipped.

The question is: how many times will the Fed cut rates in 2026? The official stance and the market have already diverged completely. The Fed's dot plot only anticipates one more 25 basis point cut next year, which implies that inflation will stabilize around 2.4% by the end of the year. But the market is betting wildly on another story—CME futures data shows the probability of a 25 basis point cut before March has surged to 45.2%, and there are even 6.5% aggressive expectations supporting a 50 basis point cut. Even more exaggerated, investment banks are collectively taking sides, with giants like Goldman Sachs and Morgan Stanley predicting a full 50 basis points of room for cuts throughout the year, while Citibank directly calls for an aggressive 75 basis point cut.

The real uncertainty lies in personnel. Powell's era is coming to an end, with Trump set to announce the new chair in January. Two candidates named Kevin are the frontrunners—Kevin Waugh is Trump's top choice, 55 years old, closely connected to JPMorgan Chase, advocating for policy independence and deeper rate cuts, but has disagreements with the president on tariffs. The other Kevin, Hasset, has a higher chance of nomination at 53%, and is a key Trump advisor who openly advocates for "aggressive rate cuts," pushing for low interest rates combined with fiscal stimulus. This combination aligns perfectly with the president's ultimate goal of a 1% interest rate.

Recently, the January 27-28 FOMC meeting is a key node. Currently, the market only assigns a 14.9% probability to a rate cut in January, with most officials adopting a "wait-and-see" attitude based on data. Paradoxically, the unemployment rate in November indeed rose to 4.6%, a new high since 2021, which sounds alarming. But looking closer, the GDP growth in the third quarter still hit a two-year high of 4.3%. One points to a recession, the other to overheating; the policy path remains truly unpredictable.