Two Fed Governors voted to cut rates at the July meeting.
Two Dissents in July
Here is the FOMC Press Release
Although swings in net exports continue to affect the data, recent indicators suggest that growth of economic activity moderated in the first half of the year. The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate.
In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Alberto G. Musalem; and Jeffrey R. Schmid. Voting against this action were Michelle W. Bowman and Christopher J. Waller, who preferred to lower the target range for the federal funds rate by 1/4 percentage point at this meeting. Absent and not voting was Adriana D. Kugler.
Bowman and Waller are Trump appointees.
Fraying Consensus
The Wall Street Journal reports Fed Holds Rates Steady, but Two Officials Back a Cut
The Fed made very few changes to its policy statement, indicating no appetite to hint at a potential cut.
Dissents from two Fed governors and Trump appointees, Michelle Bowman and Christopher Waller, offered limited insight into the Fed’s upcoming moves. Both favored reducing rates by a quarter point on Wednesday. Bowman’s dissent marked a notable shift for someone who had been a leading advocate for tighter policy in recent years and who opposed an initial cut from higher levels last September.
Waller had signaled two weeks ago his support for lowering rates, which coincides with his nascent candidacy to succeed Powell as chair next spring. He said earlier this month he was concerned about keeping rates too high for an economy that lacks the momentum to drive inflation higher—a view shared by some economists and former Fed officials.
It was the first meeting since 2020 in which more than one Fed official voted against Powell, and the first since 1993 in which more than one board governor dissented.
Companies stockpiled inventory before tariffs took effect and have been reluctant to raise prices given the possible loss of market share from inflation-fatigued consumers. But some economists warn that as businesses with thinner margins deplete their pre-tariff stock and face higher costs due to tariff increases, they’ll increasingly be forced to pass these expenses on to consumers.
“Jay is navigating so many things right now, but one thing that he says that is both true and underappreciated by his critics is that the tariffs are showing up in certain parts of the price index,” said Richard Clarida, a Trump appointee who served as Powell’s second-in-command for more than three years beginning in 2018.
Press Conference
In the press conference, Powell noted core inflation was above the Fed’s target but the composition changed from services to goods due to tariffs.
Powell noted tariff impacts may be one time, or not. The Fed prefers to wait and see.
Powell also noted a deceleration in GDP in the first half of the year, averaging the first to quarters to balance out extreme tariff impacts on imports and exports.
Powell made a very good case for his position. This can still go either way.
Economic Deceleration
I discussed economic deceleration earlier today in my post Real GDP Rebounds to 3 Percent on Strength of Reduced Imports
Advance Estimates
- GDP: 3.0 percent
- Real Final Sales: 6.3 percent
- Real Final Domestic Sales: 1.1 percent
- Real Final Private Domestic Sales: 1.2 percent
In the press conference Powell noted that Real Final Private Domestic Sales at 1.2 percent may be the best measure of the slowdown.
See above link for charts and discussion.
Clarification
Two governors have dissented for the first time since 1993, but there have been three FOMC voters who have dissented as recently as 2016 and 2019. And the last time we had two overall dissented was 2020.
Jerome Powell’s term as chairman of the Federal Reserve Board will end in May 2026. We don’t know who Donald Trump will choose to replace him, but we already know that his successor will be a disaster.
What Trump looks for in his personnel choices is, above all, groveling loyalty. So anyone he chooses will, more or less by definition, be a spineless toady. Even if the appointee looks qualified for the position, we can be sure that he or she will indulge and cheer on every Trump idea, no matter how bad. If they weren’t that kind of person, Trump wouldn’t have chosen them. At this point the mere fact that someone is willing to work for Trump, knowing who he is, tells you that they’re willing to debase themselves.
Dissenting is usually ok, but this smells of sycophancy. Under Donald I, the old saying “where you stand, depends on where you sit” should probably read “where you stand depends on where you WANT to sit.”
Turkey inflation rate is 68%. Rent inflation is 83%. More people on SNAP. Turkey min wage is: $580/M. The average salary: $900. Engineers between $40K/Y and $70K/Y. Top engineers can earn: $250K/$300K. Turkey has the second largest army in NATO, after the US, though not the most powerful. Turkey, Egypt, Israel and Iran are mini superpowers. They don’t like each other. The US prevents a direct conflict between them. Without a skillful US president centrifugal forces can blowup things between US three allies. So far The US was able to manage them, but it’s losing its grip on France, Germany, Canada and the UK.
Initial cut will begin the market blow-off top. The everything bubble will temporarily be driven even higher. Gold has been in a holding pattern, waiting to soar following a cut.
This will be ugly when it falls apart, and it will fall apart.
They have been predicting doom for decades.
the NYFED is a private entity. where all the action really takes place, too. if you never took a tour of the gold vaults below sea level, you haven’t lived a complete life. they stopped the tours. i’m sure we ain’t giving the gold back to the countries who own it. crumbling evil empire 101. go read some history. we have seen this playbook before. though usually not in democracies. amerikans are exceptional. exceptionally vile and pure nihilists. democracy works. biden and trump and mitch and schumer are perfect representatives of amerikans coast to coast.
Iranian food inflation is 40%. Bread is up 50%. Barbari up 32% to five cents. Sandak: up 50% to 3 cents. Rent inflation is up 40%. Iran deported one million Afghans construction workers. They will deport 4 million extra leftover. Min wage: $120/M. The average wage: $200/m. Programmers and cyber engineers: $40K/Y to $100K/Y. Stem grads: $5K/$10K per year. Top scientists and engineers: $150K/$200K. Zuk, get a few. They are sharp.
Why isn’t this president encouraging Americans to save money and incenting them to do that with tax breaks on interest and dividends? He claims lower interest rates will mean less money on deficit interest yet he added 8 trillion dollars to the deficit in his first term and is on track to add more during a second term. So in reality it looks as if he just wants to lower interest rates to give free money to banksters, create a debt orgy again as he did in his first term, and screw everyone in cash.
Because the president is a child molesting moron, voted into office by same.
democracy has always worked. why in the republic of plato, the ancient wise thinkers warned us not to have morons voting.
Two dissenters. Wonder since they are trump appointees if they are after the fed chair. .
Timmy, Please replace Gavin. CA needs u.
Melania likes Putin. Trump likes Waller and Bolsonaro. Within days Trump will spank Putin oil customers to get his 3%. Today he raised tariffs on Copper and Brazil to 50%. Southern Copper and Freeport McMoran deflated.
Millions of homeowners are waiting for sub 5% mortgage rates to return so that moving is affordable again. Trump is going to do it one way or another.
MMAA!
Hell yeah! And all it took was making us toxic to longtime international trade partners, stagflation, and a 2008 housing market crash! MAGA11!!!
3% growth, between 2-3% inflation and house prices still off the charts–shoish, whatcha smoking? Not stagflation (yet). Nothing like 2008 on the home price front. And as for toxic to longtime int’l trade partners…they are signing the deals right? They don’t have to. Goodness gracious I don’t like everything he does but you went 0 for 3 on your comments.
they might be in for quite a rude awakening. When they cut last year the 10 year bond spiked. Mortgage rates are tied to the 10 year. Its plausible, and probably more likely than not that a cutting campaign has the same result as last year, namely a spike in longer term rates.
These guys would flunk econ 101. The FED should lower interest rates and simultaneously drive the banks out of the savings business (which doesn’t reduce its size). They should lower policy rates and drain bank reserves.
Shifts from TDs to DDs within the DFIs & the transfer of the ownership of these deposits to the NBFIs involves a shift in the form of bank liabilities (from TD to DD) & a shift in the ownership of (existing) DDs (from savers to NBFIs, et al). I.e. it’s a velocity relationship.
The utilization of these DDs by the NBFIs has no effect on the volume of DDs held by the DFIs or the volume of their earnings assets. I.e., the non-banks are customers of the deposit taking, money creating, DFIs.
In the context of their lending operations it is only possible to reduce bank assets, & DDs, by retiring bank-held loans, e.g., for the saver-holder to use his funds for the payment of a bank loan, interest on a bank loan for the payment of a bank service, or for the purchase from their banks of any type of commercial bank security obligation, e.g., banks stocks, debentures, etc.
Just goes to show how many idiots there are in the world. The FDIC should lower its deposit guarantee to 100,000.
The Fed wants your money, bank’s money, for an IOU. The Fed gets it by paying interest on reserves. Before Oct 2008 the Fed didn’t pay interest on reserve balance. Ben is a genius.
At 4.4 percent, the payment of interest on reserves is higher than most NIMs. Hence, bank credit is restricted.
All monetary savings originate within the system. DDs are just shifted to TDs. The banks pay for the deposits that they already own.
Two governors have dissented for the first time since 1993, but there have been three FOMC voters who have dissented as recently as 2016 and 2019. And the last time we had two overall dissents was 2020.
Excellent clarification!
thanks
Dissent, lol.
total rubbish. it is pure LOL
I would largely discount the dissenters, both of whom want Powell’s job.
ZIRP Monkeys