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Federal Reserve Chairman Jerome Powell speaks to an aide. Photo: Zach Gibson/Getty Images

The market got the signal loud and clear from Fed Chair Jerome Powell yesterday — an interest rate cut is coming in July — but that rate cut may push forward tensions within the central bank.

What's happening: At June's meeting, the Fed delivered the first non-unanimous rate decision of Powell's tenure, and judging by the minutes of the FOMC meeting released Wednesday, there is disagreement among members about whether a cut next month is warranted.

  • Several FOMC members "didn't see a strong rate-cut case" and a few saw a rate cut as a risk that could create "financial imbalances" in the economy, the minutes showed.

The intrigue: Bank of America-Merrill Lynch research analysts say they're now anticipating 3 more rate cuts this year, 1 at each of the Fed's next 3 meetings. But they're also expecting some pushback from members who have been on board with the pivot to "patience," but may not be as amenable to cuts.

  • "The FOMC is not in agreement," BAML's research team said in a Wednesday note to clients. "We will likely see a number of hawkish dissents at the upcoming meeting (potentially as many as three)."

Between the lines: Powell is well respected by the market and his colleagues on the Fed, but he does not hold the sway of decorated economists like his predecessors Janet Yellen, Ben Bernanke and Alan Greenspan.

  • So far, St. Louis Fed President James Bullard has been the only voting member of the Fed's rate-setting committee to formally break with Powell. But if other, more influential, members of the committee begin to oppose him, it may foment larger rebellion.

The bottom line: The Fed's most recent dot plot showed a growing schism among FOMC voters about whether to hold rates steady or cut. For now, the expectation is that Powell's vision will win out, but he looks to be losing support, and a few dissents at July's meeting may be just the beginning.

Go deeper: The case for a Fed rate cut

Go deeper

Dan Primack, author of Pro Rata
53 mins ago - Economy & Business

Trump blocks banks from limiting loans to gun and oil companies

Illustration: Sarah Grillo/Axios

Big banks are no longer allowed to reject business loan applicants because of the industry in which they operate, according to a new rule finalized on Thursday by the Trump administration.

Why it matters: Wall Street has curtailed its exposure to industries like guns, oil and private prisons, driven by both public and shareholder pressures. This new rule could reverse that trend.

Former FDA commissioner: "Reliable drug supply is absolutely critical"

Axios' Caitlin Owens and former FDA commissioner Mark McClellan. Photo courtesy of Axios Events

Having a reliable supply of pharmaceutical drugs throughout America will be "absolutely critical" to boosting affordability in health care during the Biden administration, former Food and Drug Administration (FDA) commissioner Mark McClellan said at a virtual Axios Event on Friday.

The big picture: McClellan, who served under President George W. Bush, says drugs having limited supply and limited competition leads to elevated pricing. He considers drug supply to be a national security and public health issue.

Felix Salmon, author of Capital
4 hours ago - Economy & Business

Americans are still spending money

Source: Census Bureau; Chart: Axios Visuals

Americans spent more money at stores and restaurants in 2020 than they did in 2019 — even in the face of a devastating global pandemic that shut down broad sectors of the economy.

Why it matters: The monthly retail sales report this morning came in well below expectations, and showed consumer spending falling on a seasonally-adjusted basis. Total expenditures were still higher in December 2020 than they were a year previously, however.