Yesterday’s FOMC meeting was billed as the Fed reclaiming its ‘independent voice and the triumphant return of consensus’
Was it an interesting exercise in Group Think? Absolutely.
But was it a reclamation of ‘Independence’ and a ‘Return of Consensus’?
Let us not kid ourselves.
Yes, the headline takeaway was that the Governors Michelle Bowman and Christopher Waller, incidentally both Trump appointees as well, who dissented in the July FOMC, fell back in line, leaving only Stephen Miran, the ‘Politician-Governor’ as the lone dissenter with a 50-bps move.
July’s double-dissent, the first in over three decades, was promptly relegated to history.
And yesterday’s outcome was billed as an excellent display of consensus.
Markets, of course, love the idea of a united Fed. Market commentators rushed to declare that Powell had successfully guided his committee back into harmony and the entire committee (except You-Know-Who) had completed a victory lap.
The Board of Governors.
Unified and independent against the Politician-Governor.
End of story?
No, it’s not.
Look closer – especially at those dot plots.
Powell framed the cut as ‘risk management’ with the Balance of Risks appearing to shift towards unemployment over inflation.
But the committee’s own projections betray him:
1) The decision on whether there will be one more cut or two this year was razor thin – 10 vs. 9. That’s not consensus, that’s as divisive as it can get.
2) And buried in those dot plots? A subtle but a real dissent nevertheless – one policymaker signalling no cuts at all in 2025!
So yes, Miran grabbed the spotlight as the ONLY dissenter (and with the blackout window ending today, he will be everywhere with his soundbites starting tomorrow); but in reality, there were 2 dissents.
So yeah, the Fed’s show of unity is more performance than reality.
(In general, we have short memories. We move on fairly quickly. Such is deluge of information hitting us. In reality, it’s only been a few weeks since Gov. Kugler stepped down (her place in the committee was taken by Miran). Strangely, there was no reason offered whatsoever for her decision to leave. See extract from the FOMC MoM July 2025)
Yesterday’s meeting wasn’t the Fed reclaiming independence. Far from it. And yes, as those dot plots show: the jury is still out on whether the Balance of Risks have shifted.
Behind the choreography, the FOMC committee appears visibly less ‘independent’ and deeply divided on the path ahead.
Yesterday, in reality, was less about ‘reclaiming independence and consensus’.
But appeared more an exercise to formally introduce market participants to The Black Sheep within the FOMC’s ‘incredibly cohesive’ Board of Governors.
So yeah, all-in-all a whole lot of curated Group Think.
