凌晨降息已无悬念，结束缩表才是重点！

Core Viewpoint - The Federal Reserve is expected to announce a 25 basis point interest rate cut, with nearly 100% probability, amidst ongoing debates about inflation and employment risks [2][3][5]. Group 1: Interest Rate Decisions - President Trump has criticized Fed Chair Jerome Powell, indicating a desire for faster rate cuts and suggesting the administration is ready for Powell's term to end [2]. - There is a division among Fed officials regarding the interest rate outlook, with some acknowledging employment market risks while others remain focused on persistent inflation in the service sector [2][3]. - Fed Governor Miran supports a 50 basis point cut, arguing that a 25 basis point reduction is too slow, while Kansas City Fed President Jeff Schmid is likely to oppose any cuts [2][3]. Group 2: Balance Sheet Reduction - The Fed may pause its balance sheet reduction, which has been a significant topic of discussion, as it seeks to balance policy consistency with market liquidity risks [3][5]. - Major Wall Street banks, including Goldman Sachs and JPMorgan, predict that the Fed will halt its balance sheet reduction due to recent signs of liquidity tightening in the money market [5][13]. - Indicators of liquidity stress include the secured overnight financing rate (SOFR) briefly exceeding the upper limit of the federal funds rate target range and a significant drop in demand for the New York Fed's overnight reverse repo tool [5][13]. Group 3: Historical Context of Balance Sheet Management - The Fed's balance sheet management has seen two major phases: aggressive expansion during the pandemic and a cautious approach to reduction post-pandemic [6][11]. - The first round of balance sheet reduction from 2017 to 2019 ended abruptly due to liquidity issues, leading to a spike in repo market rates [11][14]. - The current environment suggests that further balance sheet reduction could replicate past liquidity crises, prompting calls for a halt to avoid repeating the mistakes of 2019 [11][14]. Group 4: Economic Data and Future Guidance - The ongoing government shutdown is causing a lack of reliable economic data, complicating the Fed's decision-making process regarding future rate cuts [16][17]. - Analysts express concerns that upcoming labor market data may be distorted, making it difficult for the Fed to provide clear guidance on its policy path [16][17]. - The market is closely watching Powell's statements for insights into the Fed's assessment of the economy and potential future easing measures, which could impact global liquidity and risk assets [17].