At 3 a.m. Beijing time on Wednesday, the Federal Reserve's December meeting minutes will be released. Although the meeting completed a third rate cut in 2025, opposition voices reached a new high since 2019—three members opposed, two advocated for a pause, and one called for a direct 50 basis point cut. This level of disagreement truly reflects intense internal debates within the decision-making body.

There are three key points not to be missed in this release: first, how to interpret the potential overestimation in employment data; second, whether the policy direction for 2026 can be discerned; third, whether the threshold for rate cuts has substantively risen.

The dot plot clearly shows how divided the committee is. The median forecast for 2026 suggests only a 25 basis point cut, but some members are not planning to cut at all, while others expect two cuts. It’s a complete divergence of views.

The current market betting is: hold steady in January (with an 84% probability), but still expect two cuts in 2026. The problem is, if the minutes convey a more cautious stance, the dollar could rebound, putting pressure on risk assets. Inflation, employment, and political uncertainties—these three forces are pulling in different directions, and the Fed must find a balance among them. These minutes may very well be the prelude to this year's monetary policy script.