Last night, the Federal Reserve followed the script and cut interest rates by 25 basis points, bringing the rate to the 3.5%-3.75% range, and the hidden balance sheet expansion also increased. These two have actually been priced in by the market for a while; what truly determines the liquidity trend in December is the post-meeting press conference by Powell.

After listening to his statements, I felt very divided: the path ahead is narrow, but the distant sky is bright.

First, let’s discuss why caution is needed recently. Powell revealed a bottom—last month’s reported 40,000 new jobs may be revised downward to 60,000, meaning a net loss of 20,000. If they don’t cut rates under these circumstances, it’s truly unmanageable—simply a forced move to prevent a hard landing for the economy.

More importantly, he didn’t provide a timetable for the next rate cut. Why? Because inflation is beginning to rise again, but this time it’s not driven by strong demand; it’s due to supply-side factors like tariffs pushing prices up. With this kind of inflation, even raising rates might not be enough to curb it. This also explains why internal debates are so intense—three votes against, the most fierce disagreement in six years.

So, what is the Fed actually thinking? Powell hinted: current interest rates are already close to neutral. In other words—further decreases would be active stimulation, while holding steady means maintaining neutrality. There’s a high chance they stay on hold in January, but they won’t be completely passive. The Fed has decided to start purchasing short-term government bonds, and Powell specifically mentioned stabilizing reserve levels, which signals liquidity will improve. That’s why the Dow Jones rose over 1% last night.

Here’s the key—why is he surprisingly optimistic about the long term?

The Fed’s forecast summary shows that this year’s real GDP growth is expected to be 1.7%, and next year 2.3%. Employment is declining, but the outlook for next year is better than this year? Sounds contradictory, right? So, during the press conference, someone asked a crucial question: are we experiencing...

(The original text seems to be unfinished here, but the core logic is clear: short-term defense, long-term planning, and an undercurrent of changing liquidity flows.)