After the release of the December FOMC meeting minutes, one signal has become increasingly clear— the likelihood of a rate cut in January next year is essentially nonexistent. Understanding the wording of the minutes actually reveals the true attitude of the Federal Reserve leadership.

Let's first look at the December vote. Among the officials supporting a rate cut, how many genuinely wanted to cut? Honestly, not many. Many were initially opposed and only reluctantly agreed to a 25 basis point cut, mainly due to concerns about worsening employment conditions and wanting to hedge in advance. This indicates that the rate cut was itself a compromise and does not represent a true shift in attitude.

Next, regarding inflation. The possibility of a rate cut in December was based on the assumption that inflation would naturally decline, aside from employment risks. But this time, the minutes changed tone and became noticeably more firm. The core message is to dispel the market's fantasy and to reaffirm that the 2% inflation target remains the top priority. It’s akin to pouring cold water on market expectations.

Another critical detail is that the minutes mention the initiation of RMP and the removal of the SRF cap. This combination appears to be a continued easing, but in essence, it’s a different story. The Federal Reserve is proactively strengthening the financial system’s foundation to ensure ample liquidity. The real purpose of this is not to flood the market with money but to give the January policy meeting the confidence to hold steady, waiting for several months of data before making further moves.

Therefore, the current situation is: before the January meeting, unless inflation data unexpectedly drops significantly or employment conditions suddenly worsen, a pause in rate cuts is basically the predetermined direction. Of course, if the new Fed Chair has different ideas about interest rate policy, that could break this expectation. But based on current signals, the probability of that happening is low.