From Volcker to Powell: Why Today’s Fed Meeting Is Exactly When Small Futures Traders Should Step Aside

I strongly recommend reading this article all the way to the end; your money is precious, and knowledge is what protects it.

The Fed’s meeting today comes at the end of a long journey from near-zero rates, through the fastest hiking cycle in decades, into a cautious easing phase.
From Volcker’s 20% shock therapy to Powell’s post-pandemic inflation fight, every Fed chair has left a clear fingerprint on the federal funds rate path.
For today’s meeting, the headline is a small move in rates, but the real signal is in the statement, the projections, and Powell’s tone about the next 1–2 years.

My personal view: for small individual futures traders, it seems wise to scale out of at least part of your positions before the Fed meeting.

1. Why today’s Fed meeting actually matters

The Federal Reserve is holding what is effectively its final major policy meeting of 2025.
It’s not just another “rate day”: it is a checkpoint in a multi-year shift from ultra-easy money to something closer to a new “normal”.

Markets are broadly positioned for a cautious, incremental move—most likely a small rate cut or a firmly dovish hold—rather than a dramatic policy swing. What traders care about is not only what the Fed does today, but how it describes the path ahead:

Does the Fed signal that the hiking era is definitively over?
How quickly, and how far, does it sound willing to cut in 2026?
Is the focus still on inflation, or is the tone shifting toward unemployment and growth risks?

That tone will set the mood for stocks, bonds, the dollar, and even crypto for the next few weeks.

2. A very short history of the Fed and its rate cycles

To understand why today’s decision is important, you have to zoom out. Over the last 40+ years, the federal funds rate has visited almost every level imaginable—from near 0% all the way to nearly 20%.

Volcker: killing inflation at any cost

Late 1970s–early 1980s, U.S. inflation was out of control.
Fed Chair Paul Volcker responded by pushing short-term rates into the high teens.
The result: a brutal recession, but inflation was crushed and the Fed’s anti-inflation credibility was born.

Greenspan: the “Great Moderation”

Alan Greenspan’s era saw big swings but relatively tame inflation.
The Fed hiked into the late 1980s, cut in the early 1990s, hiked again into the dot-com boom, then slashed rates after the bubble burst and after 9/11.
This period created the idea of the “Fed put”: the belief that the Fed would always ride to the rescue with lower rates when markets crashed.

Bernanke & Yellen: the age of zero and QE

The 2008 global financial crisis changed everything.
The Fed cut rates to effectively zero and kept them there for years.
It launched massive bond-buying programs (quantitative easing) to stabilize banks, credit markets, and the broader economy.
Under Janet Yellen, the Fed started a very gradual “normalization,” raising rates slowly but keeping them low by historical standards.

Powell: from zero to the fastest hikes in decades

Under Jerome Powell, the Fed first cut aggressively in 2020 during the COVID shock, taking rates back to zero.
Then, when inflation spiked in 2021–2022, the Fed responded with the fastest hiking cycle since the Volcker era, lifting rates from the floor to clearly restrictive territory in a very short time.
Those hikes finally cooled inflation, but at the cost of higher borrowing costs, stress in parts of the banking system, and constant recession fears.

chart by TradingView : USA Interest Rate

3. Where we stand going into today

Coming into today’s meeting, the backdrop looks roughly like this:

Inflation: well down from its post-pandemic peak, but still a bit above the Fed’s ideal 2% target.
Growth: slower than the boom phase, with more signs of cooling demand.
Labor market: still functioning, but job creation is less spectacular and layoffs in certain sectors are getting more attention.

Because of that mix, the Fed has already shifted from pure tightening to a more balanced stance:

It no longer talks about “front-loading” aggressive hikes.
Instead, it emphasizes being data-dependent and moving step by step.
Small cuts or a prolonged hold at slightly restrictive levels both remain on the table, depending on how inflation and growth evolve.

In other words, the Fed is trying to back away from the peak without repeating the mistakes of cutting too early and re-igniting inflation.

4. Inside today’s decision: more than just a number

For markets, three parts of today’s announcement matter more than the raw rate move.

1) The statement language

Traders will dissect every line of the FOMC statement:

Does the Fed still describe policy as “restrictive”?
Are inflation risks still “elevated,” or are they now described as “moving closer to target”?
Is there stronger mention of risks to employment and growth?

Even a single sentence shifting from “further tightening may be appropriate” to “the risks are more balanced” can move yields, equities, and FX.

2) The dot plot and projections

The Fed will also update its economic projections and the so-called “dot plot,” which shows each policymaker’s view of where rates should go over the next few years.

Key questions:

How many cuts do they envision over the next 1–2 years?
Do they see a “new normal” policy rate that is clearly above the near-zero world of the past decade?
Are growth and inflation projections consistent with a gentle glide path, or do they look more worried about either overheating or recession?

If the dots imply fewer cuts than the market is currently pricing, the message is effectively hawkish, even if the Fed trims rates today.

3) Powell’s press conference

Jerome Powell’s Q&A often moves markets more than the written statement.

A cautious Powell, leaning hard on “we are not declaring victory on inflation,” tends to push yields up and risk assets down.
A more relaxed Powell, openly acknowledging cooling growth and labor market risks, signals that the Fed is comfortable with gradual, ongoing easing.

For traders, tone, body language, and how often he repeats certain phrases are all part of the signal.

5. How this fits into the bigger picture of Fed history

Seen from above, today’s meeting is just one point on a long curve:

Volcker showed the Fed will endure immense political pain to kill inflation.
Greenspan, Bernanke, and Yellen showed the Fed is willing to cut to zero and print money to save the system.
Powell has done both: ultra-easy money in a crisis, then an aggressive inflation fight, and now a careful step-down from peak rates.

For investors, the takeaway is simple:

The era of permanent zero is probably over.
The era of double-digit rates like the early 1980s is also unlikely to return without a major systemic shock.
We are entering a middle zone where policy is neither free money nor crushingly tight, and where small changes in guidance can move markets a lot.

That’s why today’s Fed meeting, even if it delivers “only” a small tweak in rates, is so important: it tells you how the most powerful central bank in the world sees the next chapter of this new regime.

6. What this means for market participants

Without turning this into direct advice, the structure of risk is clear:

Short-term volatility around the announcement and press conference is almost guaranteed.
Positioning going into the meeting often matters more than the actual decision. If too many people are leaning the same way, even a “dovish” result can trigger a sell-off, and vice versa.
For derivatives and futures traders, the combination of leverage and event-risk makes days like this uniquely dangerous but also tempting.

And that is exactly why the earlier remark bears repeating:

For small individual futures traders, it often makes sense to scale out of at least part of your position before the Fed meeting, rather than trying to be a hero through the announcement.

You can always re-enter once the dust settles; you can’t get back capital that was wiped out by a single, badly timed candle.

This article is for informational and educational purposes only and does not constitute financial or investment advice; any decisions you make with your money are entirely your own responsibility.

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