A Short Macro Note Post FOMC

Is Powell going BRRR?

As of December 11, 2025, it appears the Federal Reserve has initiated a significant and long-term pivot in its monetary policy framework. This move represents more than a standard cyclical adjustment; it signals a structural dovetailing of monetary policy with fiscal policy designed primarily to support the US Treasury market. The Fed is currently lowering policy rates, justifying the action with an optimistic long-term outlook centered on AI-driven productivity growth. Perhaps more importantly, the central bank has returned to an expansionary balance sheet policy through a program known as Reserve Management Operation Purchases, or RMOP.