What exactly will the Federal Reserve cut next year? This question is causing divergence on Wall Street.

A major investment bank’s private banking division recently provided a relatively conservative estimate: the Fed may only cut rates by another 25 basis points in 2026. This forecast doesn’t sound like much, but the issue is—markets are currently betting on a 50 basis point cut, which is half of that.

Their logic is clear: if the U.S. labor market stabilizes or even strengthens, the Fed won’t be in such a hurry to loosen policy. This is fully consistent with Powell’s recent statements. He explicitly said after last month’s FOMC meeting that a cooling labor market is the real reason for the rate cuts, and conversely, if employment remains resilient, the threshold for easing will be raised.

Even more interestingly, there are now internal disagreements within the Federal Reserve. This decision saw three dissenting votes, the most since 2019. In other words, the decision-makers’ views on whether to continue easing and how quickly are diverging more than ever. The dot plot also confirms this—maintaining the guidance of only one rate cut in 2026.

So, the key still depends on how employment data evolves. For those looking to allocate risk assets like BTC, $ETH, the pace of the Fed’s policy will directly influence liquidity expectations and market risk appetite.