On Monday night, I wrote a preview of this week's December rate meeting: https://(x.com)/qinbafrank/status/1998016725586231628?s=46&t=k6rimWsEbo2D2tXolYcM-A. Building on @MSX_CN's post, let's chat more: 1) A 25 basis point rate cut is highly likely, and the median dot plot for next year might suggest two cuts. 2) Powell's speech will probably have a similar tone to the one at the end of October. Back then, the market interpreted it as hawkish. This time, the focus will be on how hawkish it is (e.g., specific statements like "no guarantee of another cut next time," "data-dependent," "inflation is transitory but still has risks of resurgence," etc.). 3) The potential surprise could be: will they announce bond purchases this time (mainly short-term bonds)? Reserve management purchases and regular repo operations—current reserve levels are still very low, back to the levels seen at the end of 2022. With reserves at a low point, overall liquidity has remained tight. Liquidity stress has already caused SOFR to breach the upper limit of the interest rate corridor multiple times. This is something the Fed doesn't want to see. For Powell, he wants to strike a balance. If he gives the market a rate cut, he will likely avoid making the market overly optimistic about future expectations, especially given the current significant internal divisions within the Fed. For the market, it hopes for a clear future path, but the current chair probably won't provide one. The "shadow chair" has already hinted at it. While the market will increasingly look to the "shadow chair" in the future, for now, the current chair's influence still carries more weight. If no clear guidance is given, market volatility will likely increase. As I mentioned on Monday night, if there is action on the balance sheet and the scale is decent, it could partially offset Powell's potential hawkish moves.