Federal Reserve Interest Rate Decision Outlook: No Rate Cut Confirmed, Market Focus on QT Reduction Signals

Tonight, the Federal Reserve will 100% not cut interest rates, and the rate will remain unchanged at 4.5%. This negative news has long been priced in by the market, starting from Powell's hawkish stance last December. The recent decline fully reflects this expectation.

Possible Market Reactions

📌 Has the bad news been fully priced in, leading to a rebound?

Markets often follow the logic of 'rally after bad news is fully priced in, drop after good news is fully priced in'. If this decision remains unchanged as expected, it may trigger a short-term oversold rebound, similar to the trends after Trump's election and the SEC's approval of ETFs.

📌 The Market's Main Focus: Will QT Reduction be Adjusted?

If the Federal Reserve hints at considering halting QT (Quantitative Tightening), it would be a significant positive signal, as the market has not fully priced in this expectation, especially retail investors have not reacted. Once this signal is released, it may lead to a substantial increase.

Currently, the Federal Reserve's overnight reverse repos are nearing a bottom, indicating that liquidity issues are gradually becoming apparent, and the Federal Reserve may consider adjusting the pace of QT.

If this is not announced this time, it is expected that this issue will also be discussed in the next meeting, so the market still has expectations.

Powell's Attitude: A Key Uncertain Factor

Although the overall logic is positive, the ultimate determinant of the market's short-term direction remains the tone of Powell's speech.

If his wording is mild, the market will gain support, increasing the probability of a rebound.

If he unexpectedly adopts a hawkish stance, the market may continue to experience volatility in the short term.

Summary: No rate cut is a foregone conclusion, and the market's focus is on the possibility of QT changes. If the Federal Reserve hints at slowing down the reduction, the market may welcome an unexpected rise; otherwise, it may maintain volatility in the short term. Tonight, we need to closely monitor Powell's statements and prepare response strategies!

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