Sep 23, 2019

There's nothing new about Fed disagreement

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Reproduced from Federal Reserve Bank of St. Louis; Chart: Axios Visuals

Dissent has been growing at the Fed this year and has only increased since Chairman Jerome Powell decided to cut U.S. overnight interest rates in July.

Why it matters: While there are signs the Fed's rate setting committee is a very divided body, the 6 dissenting votes against official FOMC decisions this year are hardly out of the ordinary.

Between the lines: Kansas City Fed President Esther George and Boston Fed President Eric Rosengren, who both dissented at the September meeting, have a history of opposing the committee.

  • Since joining the Fed in October 2011, George has dissented 12 times (every time in favor of rate hikes) — far more than any other member of the FOMC during that time.
  • Rosengren has dissented 4 times since joining the Fed in 2007, and 3 have come since 2013.

The intrigue: The only Fed chair to never face a dissent was Thomas McCabe, who served in the role for 3 years following World War II.

  • McCabe helped craft the Treasury-Fed Accord, which removed the obligation that the Fed monetize the debt of the U.S. Treasury at a fixed rate.
  • This accord "laid the foundations for the monetary policy the Fed pursues today," according to a Fed biography of McCabe.

What to watch: Members of the Fed will be out in full force this week.

  • Monday: New York Fed President John Williams (voter) and San Francisco Fed President Mary Daly (non-voter) will speak today, as will St. Louis Fed President James Bullard (voter), who dissented in favor of a 50 basis point cut at the September meeting.
  • Wednesday: Chicago Fed President Charles Evans (voter), George (voter), and Dallas Fed President Steven Kaplan (non-voter) will speak.
  • Thursday: Kaplan, Bullard, Fed Vice Chair Richard Clarida (voter), Daly, Minneapolis Fed President Neel Kashkari (non-voter), and Richmond Fed President Thomas Barkin (non-voter) are scheduled.
  • Friday: Fed Governor Randal Quarles (voter) and Philadelphia Fed President Patrick Harker (non-voter) will be up.

Go deeper: Federal Reserve announces 2nd consecutive rate cut

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