The quiet appearance on the charts hides a growing risk. Should BOJ officials hint at even a slight change in tone, the yen carry trade, one of the major engines behind global market performance could unwind sharply.<\/p>\n\n\n\n
With the Fed now in its blackout period, policymakers are unable to guide expectations, leaving markets to lean on a single assumption: easing is coming. Although a policy rate of 3.75% is largely priced in, the Summary of Economic Projections and Powell\u2019s delivery will decide how confidently markets extend their easing outlook into 2026.<\/p>\n\n\n\n
The dot plot will be the centrepiece. Traders are looking for clear confirmation that the Fed\u2019s projected path is aligned with what markets have already priced. Any sign of reluctance could trigger a broad repricing across FX and risk-sensitive assets.<\/p>\n\n\n\n
The end of quantitative tightening marks a return to more supportive liquidity dynamics. The Fed\u2019s recent $13.5 billion repo injection, its second-largest since the pandemic, signals strain within the funding system. Historically, when QT concludes during such periods of stress, QE often follows not long after. Although consensus expects a formal move back to QE in 2026, much may hinge on upcoming leadership changes, with Powell\u2019s term ending in May next year.<\/p>\n\n\n\n