On Thursday morning, the Federal Reserve announced its interest rate decision and made a forecast for the December interest rate meeting: 1. There is a high probability of a rate cut at this meeting. Previously, https://(x.com)/qinbank/status/1993134650039091471? S=46&t=k6rimWsEbo2D2tXolYcM-A has talked about it here. On the evening of November 21, the second and third leaders of the Federal Reserve came out together to respond to the foam and interest rate reduction issues that the market was most concerned about, which means that the three giants of the Federal Reserve probably reached an agreement, reversed the previous pessimistic mood of the market that night, and led to a wave of rebound. 2. Next is the dot matrix chart. In September, the median expected rate cut by the vote committee was only once in 26 years, and after three months, it will depend on whether there are any new changes from the vote committee. Many institutions have already begun to anticipate 2 or 3 interest rate cuts in 26 years, with Goldman Sachs' previous forecast being the most widely spread, suggesting that apart from the December rate cut, there will be at least two more interest rate cuts to 3% in 26 years. I personally feel that 2 times may meet expectations, but if it's less than 2 times, the market may start to worry 3. In fact, I think the most important thing about this interest meeting is that the Fed will announce the purchase of treasury bond bonds (as long as they are short-term treasury bonds) at this meeting to alleviate the shortage of reserves and whether the repo rate is soaring. We have been discussing the logic behind this since mid November: even if the Ministry of Finance spends on TGA and the Federal Reserve stops reducing its balance sheet, it is difficult to bring reserves back to the median value of the past three years. Bank reserves are still hovering at the critical point of sufficient to sufficient, and cannot return to a state of sufficient and excess. Unable to reach an excess state, liquidity remains tight, making it difficult to see significant improvement. This also means that in the future, only when the Federal Reserve resumes bond purchases and reserves rise to over $3 trillion, can we see a substantial improvement in liquidity. Only when reserves rise to over $3.2 trillion can we say that it will be in a state of abundance and surplus. Prior to this, overall liquidity was still in a very tight state. In November, New York Fed President Williams said twice that future liquidity replenishment may soon restart bond purchases, and in mid November, the New York Fed held an emergency meeting on the issue of tight liquidity. All of these indicate that liquidity is at a critical point and it is imperative for the Federal Reserve to purchase bonds. Otherwise, in recent months, there will be frequent and drastic breakthroughs in the upper limit of the Federal Reserve's policy rate corridor, with guaranteed overnight funding rates (SOFR) and third-party general collateral repurchase rates (TGCR), indicating that the reserve levels within the banking system are sliding from "abundant" to "sufficient" and there is a risk of further becoming "scarce". The importance of the repurchase market is self-evident for the Federal Reserve. So the biggest highlight of this interest rate meeting, which may also exceed expectations, is here. Will the Federal Reserve announce? When will the repurchase of bonds (short-term bonds) be initiated? My previous expectation was that the Federal Reserve would also have to take action in the first quarter of next year. 4. And what people are most concerned about Powell's attitude is based on the above three points: 1) Has the interest rate cut been reduced, and will it decrease in the future? Believe Powell, he will give you a Tai Chi, just like the interest rate meeting at the end of October, saying that it will definitely not happen next time. 2) The reason is also the statement made at the interest rate meeting at the end of October that inflation is still rising. Although the commodity inflation caused by tariffs should be a one-time event under benchmark conditions, it may continue to push up inflation in the short term. From these two perspectives, there is also a taste of hawkish interest rate cuts. 3) But the key is the third point above, will bond purchases be restarted? Of course, it is possible to change the name to reserve management for purchasing RMP and short-term periodic repurchase operations. Does this decision determine another major part of Powell's press conference? Someone will surely ask him how he views the risks of reserve shortages and soaring repo rates? This is also what I think is very important about this interest rate meeting, which is actually more important than interest rate cuts and dot charts. Because this is the most effective measure to address the recent market liquidity shortage. A few days ago, here was https://(x.com)/qinbafrank/status/1997140432938254525? S=46&t=k6rimWs Ebo2D2TXolYcM-A has also been discussed, but whether it can be implemented depends on Powell's attitude, and whether Williams can influence Powell and other voting committee members' attitudes on this issue. From this perspective, whether or not bond purchases will determine the market's trend after the interest rate decision and Powell's press conference: If the bond purchase is not announced this time and liquidity remains tight, and the slightly tough attitude will make the market worried, the situation of favorable landing is likely to reappear; If the announcement of bond purchases is followed by an improvement in liquidity expectations, it is actually a boost to market confidence. This article is sponsored by the meme trading tool http://(xxyy. io) | Fast trading, versatile features, and can be used to monitor on chain wallets @useXXYYio