At 3 a.m. this Thursday, the Fed is going to do something again - interest rate decisions and economic expectations will be released. Since two consecutive rate cuts in September and October, the market now almost believes that the FOMC will cut another 25 basis points to bring the federal funds rate to the range of 3.50%-3.75%.

But this time it's a little different. Because the government shutdown has caused key economic data to be missing, coupled with the fact that internal opinions are quite divided, the whole situation is quite delicate: on the one hand, the market feels that interest rate cuts are already a certainty, and on the other hand, Powell may have to play a "hawkish interest rate cut" operation - that is, the cut is a cut, but the words have to be conservative to leave some room for future policies.

Remember when Powell said before that a rate cut in December was "far from a foregone conclusion"? Now the wind has changed. CME's "FedWatch" data shows that futures traders bet on a 25 basis point rate cut with a probability of about 87%. Although there are no decisive signals from October to now, inflation expectations have fallen, and even the hawks are more receptive to another cut.

The big investment banks on Wall Street have also changed their minds. Morgan Stanley previously said that it might hold its still, but now it has changed its forecast to say that it will fall by 25 basis points, which is consistent with the judgment of JPMorgan Chase and Bank of America. Their strategists admitted that they might have been a bit in a hurry to judge the "pause in interest rate cuts" before, but now they think Powell will send a signal that the "recalibration phase" of monetary policy is over, and then it will be completely based on the data, meeting by meeting.

However, the subsequent path of interest rate cuts is not expected to be too smooth. Morgan Stanley's current forecast is to cut interest rates by another 25 basis points each in January and April, eventually bringing interest rates to the end point of 3.0%-3.25%. But Danske Bank feels that a pause in January is quite likely, because the new voting committee members in 2026 have previously publicly opposed the October rate cut. According to Dansk, the last two 25 basis point rate cuts may have to wait until March and June.