December 11th, the dust has settled.

The Federal Reserve announced a 25 basis point rate cut as expected, with the federal funds rate target range adjusted to 3.5%-3.75%. Including the two moves on September 17th and October 29th, this is the third rate cut of the year — a quite steady pace.

What’s even more noteworthy is the signal from the dot plot: a further 25 basis point cut is expected in 2026, and the same in 2027. According to the median forecast, the rate will decrease to 3.4% in 2026 and further down to 3.1% in 2027.

What does this gradual easing path mean for risk assets? The market has already started to vote with its feet. Once the rate cut cycle begins, changes in liquidity expectations tend to be more important than the cuts themselves.