What is the true story behind the Fed's "words and actions"?

Recently, the Fed's operations have left many people a bit confused. On one hand, they announced a 25 basis point rate cut, presenting the stance of an "inflation fighter"; on the other hand, they secretly injected nearly $40 billion into the financial system through standing repurchase facilities (SRF) and other liquidity tools. It's like an ex saying goodbye while still ordering your favorite late-night takeout—actions speak louder than words.

Unpacking this operational logic isn't complicated:

On the surface, the Fed maintains the "we remain cautious" persona—inflation still poses risks, QE doesn't exist, and they are being very rational. But in practice, liquidity tools are operating at full throttle, and bank reserve levels are quietly rising. They want to maintain the appearance of hawkishness without letting the financial markets actually collapse.

What does this mean for the market? The most direct implication is: liquidity is indeed increasing. These $40 billion are not just numbers on paper but real market fuel, directly supporting risk asset valuations. When the liquidity gate in traditional finance shows cracks, Bitcoin and Ethereum often become the most sensitive spillover outlets. The crypto market's response to liquidity changes is usually several beats faster than traditional markets.

In the future, this "say one thing and do another" pattern may become a routine operation for the Fed in this new phase. Against this backdrop, any panic-driven declines triggered by "hawkish rhetoric" are essentially market sentiment-driven discount opportunities.

There is a fundamental rule in financial markets worth remembering: don't just listen to what the central bank says; watch what it actually does. When liquidity is genuinely increasing, that's the real market signal.