The market is concerned about policy guidance, not the rate cut itself
Probability shows that the Fed has a 97% chance of cutting rates by 25 basis points today, but the real risk lies in its outlook for 2026. September forecasts show the Fed will only cut rates once next year, with year-end rates remaining at 3.4%. Analysts expect that as the Fed continues to keep rates unchanged in early 2026, its policy guidance will shift to neutral-hawkish, which could put pressure on the stock market. Powell may emphasize that further rate cuts require weaker inflation or rising unemployment. As his term ends in May, today's decision and press conference will be closely watched.
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