Powell Just Turned the Rates Down

Powell Just Turned the Rates Down and Balance sheet expansion up

The ?Fed just cut rates again to 3.5–3.75% in a 9–3 split decision , with Goolsbee and Schmid opposing the cut, and Miran pushing for a 50 bps movep. Stocks up, short-term yields down. ( futures not so much, ?post Oracle announcement)?

Here is a little montage of Powells moves

But the real move is on the balance sheet

On Dec 12, the Fed starts buying about $40B of Treasury bills over the next 30 days, just days after officially ending QT. The official line is “reserve management” and “maintaining ample reserves.”

Translation: we’ve gone from shrinking the balance sheet… to quietly growing it again.

At the same time, the latest projections keep only modest cuts pencilled in for 2026, even though several officials are now leaning toward multiple cuts. That’s not a unified Fed; that’s a committee arguing over how much easing deficits and a softer economy will eventually force them into.

For investors, the regime now roughly looks like:

Policy rate drifting down
Balance sheet drifting up
Fiscal deficits still large

Historically, that combo tends to be friendly to nominal asset prices…?