It's 2025, and this is the Federal Reserve's latest "hawk-dove distribution," with significant internal divisions

Accompanied by strong non-farm payroll data, the Federal Reserve's interest rate hike expectations for 2025 have risen significantly.

On January 13, Deutsche Bank's Chief U.S. Economist Matthew Luzzetti and his team released a report, updating the "hawk-dove distribution" chart for the 2025 Federal Reserve voting members based on Deutsche Bank's subjective assessment of the policy tendencies of Federal Reserve officials. A score of 1 indicates the most dovish, 5 indicates the most hawkish, and 3 indicates a neutral policy stance.

Deutsche Bank stated that overall, the policy tendencies of the 2025 voting members are similar to those in 2024, with an average score close to a neutral policy (i.e., 3 points). However, the differences in scores among committee members in 2025 are greater compared to last year.

Specifically, in 2024, most regional committee members had a neutral policy stance, with Cleveland's Beth M. Hammack (5 points) being the only exception, as she opposed the rate cut in December. In 2025, there are two hawkish regional members, Kansas City's Alberto Musalem (4 points) and St. Louis's Jeffrey Schmid (5 points), along with one dovish member, Chicago's Austan Goolsbee (1 point).

As for the permanent members, divisions still exist, with Michelle K. Bowman (5 points) maintaining a hawkish stance and opposing the 50 basis point rate cut by the Federal Reserve in September, while Christopher J. Waller (2 points) has recently maintained a dovish position.

Luzzetti and his team indicated that this apparent divergence in policy tendencies may lead to more disagreements within the committee in 2025, especially considering the changes in trade and immigration policies since Trump's administration, which could significantly impact the U.S. supply chain and complicate economic conditions, exacerbating divisions within the Federal Reserve.

In this regard, Deutsche Bank expects the nominal neutral interest rate to be around 3.75%, and the Federal Reserve may maintain interest rates relatively stable in 2025—utilizing limited rate cut space while keeping monetary policy restrictive.

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