Is the Federal Reserve really planning big moves in 2026? A combination of liquidity injections and rate cuts—what is the market waiting for?

On one hand, printing money wildly; on the other, signaling rate cuts. Is the Fed's move about to fully loosen policy?

▎Monthly $40 billion bond purchases have started; the money is coming
According to the latest market surveys, the Federal Reserve plans to buy $220 billion worth of short-term government bonds over the next 12 months. The number sounds significant, but more importantly—this has already officially started since the December meeting. Why? Simply put, the financial system is short of funds, and reserve levels have fallen below warning lines. The Fed’s plan is straightforward: buy $40 billion each month, with two rounds of concentrated operations in January. In other words, liquidity will be continuously injected into the market over the coming months.

▎Rate cut expectations are clear; only waiting for inflation data to confirm
At the same time, the minutes from the meeting have sent a clearer signal: most officials support the rate cut in December, and the general consensus is—if inflation continues to decline, there’s no problem with further easing (i.e., further rate cuts). Although there are some disagreements internally about the pace of rate cuts, one fact is certain: the Fed’s dovish stance has been confirmed. Now, it all depends on when inflation data will give the final green light.

▎The true meaning of this combined approach
Expanding the balance sheet through bond purchases + paving the way for rate cuts—this move by the Fed is injecting new liquidity expectations into the market. Is a new easing cycle already arriving early? The market’s pricing mechanism is providing the answer.