Federal Reserve officials intensively send hawkish signals, and rate cut expectations are once again dashed

Federal Reserve officials have continued to speak out today, sending a clear policy signal: no intention to further ease policy in the near term. St. Louis Fed President James Bullard stated that there are few reasons to loosen policy further in the short term, echoing earlier remarks from New York Fed President Williams. Additionally, the released US December CPI data has become a key reference for the market. These signals indicate that the market’s previous expectations of rate cuts are facing significant adjustments.

Fed Officials’ Stance Tightens

Hawkish signals intensively released

According to the latest news, Fed officials have formed a highly consistent policy stance today:

Although their wording differs slightly, the core message is the same: the Fed will not change its policy stance in the foreseeable future. This directly challenges market expectations of “multiple rate cuts by 2026.”

Why now release these signals

The Fed officials’ decision to speak intensively around the CPI data release is no coincidence. According to relevant information, the US December CPI data will be released at 21:30 Beijing time, which is a key indicator for market judgment of inflation trends. The hawkish statements from officials are essentially “expectation management”—preemptively signaling to the market not to hold overly high hopes for rate cuts.

Direct Market Impact

Risk assets under pressure

What does the hawkish stance of Fed officials imply? Simply put:

• The US dollar index will continue to be supported, with a strong dollar exerting pressure on all non-US assets
• Cryptocurrencies, as risk assets, face more severe financing costs
• Equity market valuation expansion is limited, with high-valuation tech stocks being the first to feel the impact
• Safe-haven assets like gold, while benefiting in some periods, will see limited gains as long-term interest rate expectations rise

Market expectation adjustments

Market previously widely expected the Fed to cut rates multiple times by 2026. This expectation now needs significant revision. According to relevant information, the intensive speeches by Fed officials and the CPI data release form a “triple test,” which could significantly increase volatility. This means the market needs to reprice all assets sensitive to interest rates.

Key Focus for Follow-up

While the Fed officials’ speeches send clear signals, the market should pay attention to:

• Whether more Fed officials’ statements in the coming weeks remain consistent
• Whether economic data can support the Fed’s hawkish stance (if economic data deteriorates, officials’ attitudes may change)
• The true trajectory of inflation data (if inflation indeed declines, rate cut expectations could re-emerge)

Summary

Today’s intensive remarks from Fed officials mark the complete breakdown of market expectations for rate cuts. From Williams to Bullard, from morning to evening, hawkish signals layer upon layer, forming a clear policy framework: interest rates will remain high in the short term. For the crypto market and other risk assets, this means adapting to a longer and more severe high-interest-rate cycle. The market’s re-pricing has just begun, and subsequent volatility may continue.