The event is over. The volatility has hit. Here is exactly what happened, why the market rallied into the close, and the trap setting up for tomorrow.
🧐 The Headline Result: 25bps Cut + Liquidity Boost
The Decision: CUT 25 bps (Target: 3.50%–3.75%).
Reaction: As expected (88% priced in).
The Surprise (Liquidity): The Fed officially Ended Quantitative Tightening (QT).
The Move: They deleted the “reducing holdings” paragraph and replaced it with a directive to “initiate purchases of shorter-term Treasury securities” (Bills) to maintain “ample” reserves.
Translation: Stealth QE is back. They are injecting ~$40B/month into the system. This is rocket fuel for risk assets (Stocks/Crypto) even if rates stay higher.
🔫 The “Civil War” (The Dissents)
The consensus is broken. This was the most fractured vote since 2019.
The Vote: 9–3 Split.
The Dove: Governor Stephen Miran voted against (Wanted -50bps).
The Hawk: Jeffrey Schmid voted against (Wanted Pause/No Change).
The SHOCKER: Austan Goolsbee (Chicago) joined the Hawks and voted for NO CHANGE.
Why this matters: Goolsbee is typically a Dove. If he wants a pause, the “Skip” narrative for January is now the base case.