Fed Update: The Dissenting VoteSo I've covered last week's interest rate cut , but a word came out that there was a dissenting vote.
11 FOMC Members voted for a standard 25 bps cut.
1 FOMC Member (Steven Mirren - a Trump appointee recently from the White House) voted for a more aggressive 50 bps cut.
This matters because Mirren, with access to non-public White House data , saw something concerning enough to warrant a much larger stimulus. The question is, what does the WH know that justifies a double-sized cut? This dissent underscores the underlying economic risks Powell alluded to.
Impact & Outlook
Today markets sold off on the reduced certainty of future rate cuts. The hope for a quick series of cuts has been dampened.
The Fed is now firmly in a "meeting-by-meeting" mode. I do not expect a pre-set easing path. Future decisions will hinge entirely on incoming data, especially inflation reports and jobs numbers.
Powell pointed to policy uncertainty (tariffs, etc.) causing businesses to postpone hiring and investment, and a sharp drop in immigration reducing labor supply.
Implications
USD: Bullish. A patient Fed with a restrictive stance supports the dollar.
Equities: Bearish in the short term. The removal of the "Fed put" narrative and heightened uncertainty could lead to continued volatility and pressure on growth stocks.
Treasuries: Yields may stabilize or rise slightly as expectations for deeper cuts are priced out.
The Fed is walking a tightrope, and it really tells to prepare for heightened volatility driven by each new data point.
