What did the Federal Reserve do this time? Simply put: rate cuts are unlikely, but some money will still be released.

Let's start with the harsh truth—according to the updated dot plot in December, there may only be one rate cut throughout 2026. That's right, just one. The market was originally hoping for multiple cuts, but it now seems that those hopes are pretty much a pipe dream. The entire 2026 will probably be spent in a high-interest-rate environment.

But Jerome Powell isn't entirely without benefits. The Fed will purchase $40 billion worth of assets this month, directly expanding their balance sheet, and they are starting immediately. This move was somewhat unexpected and can be seen as a short-term boost to market confidence.

But don't celebrate too early— the Fed explicitly emphasized that this is not quantitative easing. They are buying short-term government bonds mainly to ease liquidity pressures in the overnight lending market. This kind of purchasing won't last forever, and it will stop at some point next year.

See, on the left hand, they slap you with a reality check (no rate cuts in 2026), and on the right hand, they give you a candy (short-term liquidity injection). The crypto and US stock markets have indeed started to rebound due to this unexpectedly large liquidity release. But here's the problem—next meeting, rate cuts are probably off the table again. How long can this rebound last? Be cautious of a correction after the positive sentiment fades, everyone.