Powell comments about future rate cuts reflect growing division within the Fed

The big surprise from Wednesday's Federal Reserve policy meeting was chair Jerome Powell's repeated efforts to throw cold water on expectations that another rate cut is a sure thing by year-end — a reflection of an increasingly vocal, and frustrated, contingent of monetary hawks.Why it matters: So much attention has been paid to the push to lower rates, advanced by President Trump appointees and eventually embraced by Powell himself, that it's easy to overlook how deeply worried a contingent of policymakers remain about still-elevated inflation.Powell acknowledged "strongly differing views" on the committee about a December rate cut and stressed that another move by year-end is "not a forgone conclusion — far from it."Between the lines: It sure sounds as if this was the most heated closed-door policy debate in quite some time — though the signs that there's deeper division within the central bank have been evident for a while, if you know where to look.It's hard to recall such an explicit effort by the Fed chair to correct market pricing – all but telling traders that they had become overly confident about another rate cut on the way.And it implies that, unless economic data breaks to more clearly indicate whether the job market or inflation is the bigger problem, Powell and his successor will face internal resistance to bringing rates down much further.By the numbers: Markets had all but fully priced in a December rate cut, with 88% odds heading into the meeting, per the CME FedWatch tool.Powell's jawboning achieved its goal, and moves in futures markets since the press conference have brought those odds down to 71%.Reality check: The consensus around three rate cuts has always been more fragile than some of the analyst notes (and futures market pricing) would suggest.In projections released in September, it is true, as was widely reported, that the median Fed policymaker saw three more interest rate cuts in 2025.But that was by a hair's breadth, with 10 of 19 seeing three or more rate cuts. The other nine saw fewer as likely to be justified.Reserve bank presidents including Beth Hammack (Cleveland), Jeffrey Schmid (Kansas City), Alberto Musalem (St. Louis) and Lorie Logan (Dallas) have, in recent speeches, emphasized inflationary risk when prices have been rising at nearly a 3% rate even before tariffs' effects take hold.Yes, but: The reserve banks rotate voting slots, so in pure vote-counting terms, the bloc of hawks punches below its weight on the committee. This year, only Schmid and Musalem out of the four have votes.Of note: Reflecting the scale of the committee's divide, Schmid dissented, preferring to leave rates unchanged. Governor Stephen Miran dissented, favoring a more aggressive rate cut.There have been only three occasions this century in which there were Fed dissents in opposite directions at the same meeting, most recently in 2019.

Comments

World news

'You've got to be kidding me!' Davis Schneider's dad's wonderful reaction to his homer

National Post

A Houston woman raised $42,000 after claiming a man she rejected threw a brick at her. She’s just been found guilty of theft

about 2 hours ago

Priest horrified to learn he is Himmler’s grandson after recognising Nazi’s mistress on Wikipedia

Independent

Comments

Similar News

Federal Reserve is ‘driving in the fog’ as shutdown clouds outlook, Powell says

Jay Powell thinks rates don’t have far to fall

What to know about Trump's finalists to replace Powell as Fed chair

After Powell’s victory and Caerphilly, Starmer faces an impossible balancing act

How Lucy Powell’s deputy leadership win puts her in line to succeed Starmer

Why Lucy Powell’s victory will make life harder for Keir Starmer

Lucy Powell wins Labour deputy leadership election

Lucy Powell elected deputy Labour leader

Lucy Powell elected new deputy leader of Labour in blow to Starmer’s authority

Lucy Powell urged ministers to rethink legal action against Labour donor’s firm

Powell signals support for more rate cuts as US job market cools

Lucy Powell calls on Labour not to ‘write off’ May local elections

Jonathan Powell had no role in dropping of China spy case, senior minister says

Lucy Powell tells Labour it can’t sugarcoat how badly things are going

Jonathan Powell to face MPs over role in collapse of espionage trial

Labour members feel disconnected from government, says Lucy Powell

World news

'You've got to be kidding me!' Davis Schneider's dad's wonderful reaction to his homer

Brad Marchand guest coaches Halifax hockey team for friend who lost 10-year-old daughter to cancer

U.K. newspaper's interview flub echoes Canadian cases of mistaken political identity

Carney is set to announce immigration plan. Where do levels stand now?

Animal rescue groups seize hundreds of animals from 2 northern Alberta properties

New Brunswick Liberals say gas prices to drop by about 8 cents a litre with tax cut

Alberta students walk out of class in support of teachers forced back to work

At least 2 dozen dead as Hurricane Melissa hurtles through Cuba, Haiti

Saskatchewan introduces bill that would allow tailgating outside Roughrider games

Trail firefighter on trial for assault, charges stayed against 2 others

Churchill portrait thief loses appeal, heads to Supreme Court

Watch out for flying Halloween decorations as rain, wind on tap for Atlantic Canada

Top Trump officials Miller, Noem and Rubio adopt bunker mentality with housing reserved for military officers: report

A Houston woman raised $42,000 after claiming a man she rejected threw a brick at her. She’s just been found guilty of theft

Priest horrified to learn he is Himmler’s grandson after recognising Nazi’s mistress on Wikipedia

Vance blasts Democrats for holding Americans ‘hostage’ with shutdown as paychecks go unpaid: Live updates

Hurricane Melissa live updates: At least 34 dead across Caribbean as storm barrels toward Bermuda

Elderly woman sues after claiming ride on Trump Tower’s ‘golden escalator’ led to ‘permanent’ injuries

Anchorage shaken after 5.4 magnitude earthquake strikes Alaska

Mushroom clouds over Vegas? What Trump’s nuclear weapons tests could mean for America and the world

Nationals finalizing hire of 33-year-old Blake Butera as manager, AP source says

MGM casino head admits company lost its way with summer prices and regrets ‘infamous’ $26 bottle of water

Germany's Merz urges deeper European ties with Turkey despite disagreement on Gaza

The Latest: Trump administration limits refugee admissions to mostly white South Africans

The East Coast is getting drenched by rain and flooding today. How will it impact your Halloween trick-or-treating?

China’s Global Initiatives Are Worth Taking Seriously

What Trump and Xi Did—and Didn’t—Agree To

A Ukraine-Baltics Security Pact

Why Are China’s Generals So Quiet as Xi Purges Them?

The messy truth about free speech

Pakistan and Afghanistan to resume talks in Istanbul after dialogue deadlock, officials say

William and Kate win privacy case against French magazine over family holiday photos

Death toll from Rio de Janeiro police raid on drug gang rises to 121

Germany's Merz urges deeper European ties with Turkey despite disagreement on Gaza

Democrats rage at "unsatisfactory" Trump administration briefing on drug boat strikes

Woman dies in shower after horror 'electrocution' as grandma makes terrifying discovery

Putin could cause 'radioactive tsunamis' with horror new underwater nuke

Sudan maternity hospital horror as 460 killed in 'hell on Earth' shooting massacre

'The bodies just kept coming' - photographer at deadly Rio police raid

Russian activity increasing around key Ukrainian town, army chief says

Trump caps refugee admissions at record low - with most to be white South Africans

Trump administration sets lowest-ever cap on refugee admissions to U.S.

Trial of 98-year-old nun accused of sex assault on student stayed over evidentiary problems

SHA to launch daily updates for emergency services disruptions

Winnipeg high school football player dies after serious in-game injury

Maine network ends primary care after losing Medicaid due to Trump defunding Planned Parenthood

Louvre jewel heist: French police arrest 5 more in ramped-up probe

More doctors, less retention: New Manitoba report

Quebec doctor crisis deepens as longtime minister resigns

Montreal transit strike to disrupt metro, bus service during election day

Family of British commentator Sami Hamdi accuse US of ‘abducting’ him over criticism of Israel

Popular Halloween treat recalled ahead of spooky season amid 'life threatening' allergen risk

Gothic church loses title of world’s tallest to Spanish rival

Former Trump official says the president ‘doesn’t give a s***’ about SNAP as funding set to end

Netherlands election 2025: Rob Jetten could become youngest leader after close tie with Geert Wilders

Cracker Barrel takes the self-deprecating route when someone suggests restaurant as new White House addition

China has approved TikTok transfer deal, Bessent says

Illinois Governor begs ICE to pause Chicago operations over Halloween so families can celebrate without fear

Inside the $1bn Grand Egyptian Museum as 50,000 artifacts go on display from Tutankhamun to Khufu’s solar boat

Federal agencies are backing plans to ban top-selling home internet router because of national security fears: report