The Fed’s grand finale tonight: Rate cuts are just a side dish, liquidity and internal divisions are the main course.

[BlockBeats] At 3:00 AM on Thursday, the Fed will reveal the outcome of its last rate-setting meeting of the year. A 25 basis point rate cut? The market puts the probability at 87.6%, so it’s basically a done deal. But what everyone is really watching this time isn’t just whether or not they’ll cut by a few basis points.

The real drama centers on two questions: Will the Fed signal “balance sheet expansion” and inject more liquidity into the market? And how will the increasingly fierce “politicization” and factional infighting among officials reshape the monetary policy script for 2026?

Let’s talk liquidity first. After quietly halting quantitative tightening, what will the Fed do next with that massive balance sheet? Last Friday, Bank of America’s rate strategists predicted that the Fed would announce this week a plan to buy $45 billion in short-term Treasury bills (those with maturities under one year) each month starting in January, under the guise of “reserve management operations.” Sounds technical, but in practice, it’s just injecting more liquidity into the market.

Now for the internal “political stress test” among officials. Of the 12 voting members on the Federal Open Market Committee, 5 have explicitly opposed or questioned further policy easing, while 3 board members support rate cuts. This setup means we could see more than three dissenting votes for the first time since 2019—and looking even further back, this kind of split has only happened 9 times since 1990.

So for this meeting, the rate cut is the headline, but liquidity management and internal divisions are the real storylines. Powell’s press conference at 3:30 AM is likely to see reporters grilling him until he turns green.