Fed to Announce Rate Decision at 03:00 — Markets Price a 25bp Cut
The Federal Reserve will release its rate decision at 03:00 on Thursday. Markets broadly expect a 25 basis-point cut, bringing the target range to 3.50%–3.75%. The FOMC shows unusual internal disagreement, with some voting members possibly opposing further cuts. Key October data are missing due to a U.S. government shutdown, so the Summary of Economic Projections (SEP) and the dot plot are expected to show limited changes. Liquidity policy is in focus: after balance-sheet runoff ends, attention is on whether the Fed will launch a Reserve Management Purchase (RMP) program. Bank of America projects the Fed might buy roughly $45 billion of short-term Treasuries per month starting in January; including mortgage-backed securities reinvestment the monthly scale could reach about $60 billion. If an RMP is announced, market attention may shift from the policy rate path to the Fed’s balance-sheet operations. This report is informational and not investment advice.
Neutral
Expected 25bp rate cut is already priced into markets, which limits immediate shock and points toward a neutral near-term reaction. However, uncertainty from dissent within the FOMC and missing October data raises volatility risk around the press release and dot plot. The major potential market-moving element is a possible Reserve Management Purchase (RMP) program: an announcement would signal a shift toward balance-sheet-driven liquidity support, which historically can be supportive for risk assets if it increases dollar liquidity and lowers longer-term yields. Short-term impact: possible intraday volatility around the announcement and communications, with crypto seeing mixed flows depending on risk sentiment and dollar/yield moves. Long-term impact: if the Fed adopts sustained monthly Treasury and MBS purchases, that could be moderately bullish for risk assets (including crypto) by easing financial conditions; conversely, persistent internal dissent or guidance signaling slower easing could be bearish. In past episodes (e.g., QE announcements), balance-sheet easing supported risk rallies, while unexpected hawkish signals prompted sharp risk-off moves. Traders should monitor Fed language, the dot plot, and any RMP details for cues on liquidity and rate expectations.