The Wednesday decision revealed a large number of "silent dissenting votes," indicating that the Federal Reserve's level of division is far beyond market expectations

Although Federal Reserve Chairman Jerome Powell pushed for another rate cut decision on Wednesday, this action obscured the growing divisions within the central bank.

At this Wednesday's meeting, Powell ultimately facilitated a 25 basis point rate cut. However, in addition to a few voting members who publicly cast dissenting votes, a large number of regional Federal Reserve presidents who participated in the debate but are not on this year's voting list expressed opposition signals.

The latest dot plot reveals this phenomenon known as "silent dissent." The data shows that six decision-makers believe the benchmark federal funds rate should be in the range of 3.75% to 4% in 2025, a level consistent with rates prior to the meeting, directly implying that they actually oppose this rate cut. Given that these officials are mostly non-voting members, their positions have not been reflected through formal dissenting votes, but significant pressure has formed in internal discussions.

This rift not only surprised the market but also cast a shadow over the policy outlook for 2026. As Powell's term nears its end, the willingness of various parties to express dissent through formal or informal channels has significantly increased, indicating that whoever the next Federal Reserve chairman is will face a Federal Open Market Committee (FOMC) that is extremely difficult to coordinate and reach consensus, potentially reducing the predictability of policy.

Rare Division

The degree of this division is extremely rare in the recent history of the Federal Reserve. Former Philadelphia Fed President Patrick Harker stated:

"This is very unusual; in my more than a decade of involvement with the Federal Reserve, I have never seen this situation."

He indicated that if he were still in office, he would be one of those "silent dissenters" and believes that this rate cut is a "mistake."

In the formal vote on Wednesday, the dissent within the FOMC has become public. Kansas City Fed President Jeff Schmid and Chicago Fed President Austan Goolsbee formally cast dissenting votes, advocating for maintaining the current interest rates. Meanwhile, another board member, Stephen Miran, held a completely opposite view, advocating for a larger rate cut. However, aside from these three formal dissenting votes, the remaining opposition voices were expressed through more covert mechanisms.

Invisible Resistance Behind the Data

In addition to the six officials opposing the rate cut shown in the dot plot (at least four of whom, and possibly all, lack voting rights for this meeting), another key clue is hidden in the documents released on Wednesday. As a matter of course, the regional Fed boards, composed of business leaders, submit recommendations on the discount rate to the Federal Reserve, which is typically seen as a direct reflection of the stance of the regional Fed presidents.

In this recommendation, only 4 out of the 12 regional Feds supported the rate cut, meaning that up to 8 regional Fed presidents may actually prefer not to cut rates. This data distribution indicates that the hawkish view favoring the maintenance of interest rates is highly concentrated among the regional Fed presidents. Compared to the Washington board members appointed by the White House and confirmed by the Senate, these regional officials tend to favor maintaining higher interest rate policies

Powell's Dilemma and His Successor's Challenge

Faced with such obvious differences, Powell attempted to downplay the contradictions at the post-meeting press conference. He argued that it is expected to have differing opinions when inflation remains above the Federal Reserve's 2% target and signs of weakness appear in the labor market. Powell stated:

“Many participants see both unemployment and inflation as having upward risks, and with only one policy tool, you cannot address both sides simultaneously, which makes the situation extremely challenging.”

However, the willingness of so many decision-makers to hold their ground signals future governance challenges. According to Bloomberg, whoever U.S. President Trump nominates to succeed Powell next year—including the current frontrunner, White House National Economic Council Director Kevin Hassett—will face significant challenges in steering the FOMC.

Calvin Tse, head of U.S. strategy and economics at BNP Paribas, pointed out:

“Chairman Powell has been in office for a long time and has a very high reputation. If there are already three formal dissenting votes under his leadership, it is hard to imagine that a new Federal Reserve chairman could easily reach a consensus among FOMC participants.”