The Fed's December Rate Cut Is Coming, But This Round of Easing May "Run Out of Steam"

After the Fed's rate cut in December, the "easing cycle" may have to hit the brakes—the current streak of seven consecutive rate cuts has already pushed rates down to 3.75%-4.0%, just a step away from the 3% neutral rate.

More importantly, inflation is still stuck at 3% and hasn't landed, far from the Fed's 2% target. This means the December rate cut is most likely the "late-stage wrap-up," and it's basically unlikely that there will be any action in the January 2026 meeting. The next rate cut will have to wait until at least March or even April, and in the meantime, all eyes will be on whether inflation and employment data hold up.

A rally fueled by continuous easing can easily run out of momentum when rates approach neutral and inflation hasn't met targets. Next year, the market will likely shift from an "easing frenzy" to a "data-driven" choppy mode—easy wins won't come so easily anymore.
#十二月行情展望