The Fed cutting rates tonight is a minor issue; the real drama lies in "liquidity injection" and internal strife.

[BlockBeats] At 3 a.m. this Thursday, the results of the Fed’s last interest rate meeting of the year will be announced, and half an hour later, Powell will hold a press conference. A 25 basis point rate cut? CME data shows the probability is as high as 87.6%, so it’s almost certain.

However, whether or not there is a rate cut is not actually the main focus. The market is really watching two things: Will the Fed “inject liquidity” into the market? And, how will the increasingly obvious political factions within the Fed affect next year’s policy?

First, liquidity. Balance sheet reduction has quietly come to a halt. Now the question is how the Fed will deal with its massive balance sheet. Last week, Bank of America’s rates strategy team made a prediction—they think the Fed may announce, starting in January, monthly purchases of $45 billion in Treasury bills with maturities of one year or less, officially called “reserve management operations.” If this really happens, market liquidity will be fundamentally transformed.

Next, internal divisions. This meeting may be the most contentious in recent years. Of the 12 voting members of the Federal Open Market Committee, 5 have explicitly opposed or questioned continued policy easing, while 3 members of the Board of Governors support a rate cut. This division is making the narrative of a “politicized Fed” increasingly credible. Looking back at history, since 2019, there hasn’t been a single meeting with more than three dissenting votes; going back to 1990, that’s only happened nine times.

The roadmap for monetary policy in 2026 may well be shaped by this highly controversial meeting.