Fed watchers agree that the hawkish<\/strong> tea leaves spilling out of the central bank\u2019s April 28-29 meeting indicate the dissenters do not believe it was appropriate for the Federal Open Market Committee to signal that the next interest rate action could be to lower rates<\/strong>.<\/p>\n Judging from the language in its official post-meeting statement, the FOMC appears to signal it could cut benchmark interest rates this year \u2014 rates that guide short-term borrowing<\/strong> from credit cards<\/strong> to business loans<\/strong>, and even indirectly, mortgage rates<\/strong> in the stagnant U.S. housing market.\u00a0<\/p>\n The FOMC, in a decisive 8-4 vote on April 29<\/strong>, held the benchmark federal funds rate steady at 3.50% to 3.75%.<\/p>\n The primary point of three of the opposing votes? The two magic words \u201cadditional adjustments,\u201d<\/strong> which in Fed-speak means, in this situation, a signaling of resumption of rate cuts.<\/p>\n Regional presidents Beth Hammack of Cleveland, Neel Kashkari of Minneapolis, and Lorie Logan of Dallas<\/strong> all released independent statements May 1, saying the Fed should be more explicit that the next monetary-policy step may not be a rate cut, but rather a rate hike as inflation risks rise due to the Iran war.<\/p>\n \u201cI believe the FOMC should offer a policy outlook that signals that the next rate change could be either a cut or a hike,<\/strong> depending on how the economy evolves,\u201d Kashkari said in a statement released May 1.<\/p>\n \u201cThis could tighten financial conditions somewhat today, pushing back against a high-inflation scenario that could require an even stronger monetary policy<\/strong> response in the future,\u2019\u2019 Kashkari said.<\/p>\n It was the FOMC\u2019s third pause<\/strong> after making three quarter-point cuts during its last three meetings of 2025 due to a weakening labor market \u2014 and the first time in more than 30 years the FOMC vote reflected four dissents.<\/p>\n \u201cThe center is moving toward a more neutral place<\/strong>,\u201d outgoing Fed Chair Jerome Powelltold the post-meeting press conference, describing the U.S. economy as \u201cresilient\u201d <\/strong>in spite of the decade\u2019s price shocks from the Ukraine and Iran wars, the Covid pandemic, and President Donald Trump\u2019s tariffs.<\/p>\n A neutral state is when an economy operates at sustainable growth with stable inflation and full employment without overheating or recessionary pressure.\u00a0<\/p>\n It can also mean interest rates move in either direction<\/strong>.<\/p>\n But Powell added: \u201cPeople are not saying that we need to hike now.\u201d<\/p>\n The FOMC statement said that \u201cdevelopments in the Middle East <\/strong>are contributing to a high level of uncertainty about the economic outlook.\u201d\u00a0<\/p>\n \u201cIn considering the extent and timing of additional adjustments<\/strong> to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook and the balance of risks,\u2019\u2019 the statement said. \u00a0<\/p>\n Fed Governor Stephen I. Miran <\/strong>voted against the rate pause, preferring to lower the target range for the funds rate by a quarter-point.<\/p>\n Miran, the most dovish of the Board of Governors, will be replaced by incoming Fed Chair Kevin Warsh later this spring.<\/p>\n In general, Kashkari, Logan, and Hammack concurred with the rate pause but not <\/strong>with the signal that the next policy move would be to resume lowering interest rates.<\/p>\n In a separate statement published May 1, Hammack agreed with Powell that the economy has been resilient so far this year but added that rising oil prices<\/strong> add to broad-based inflationary pressures.\u00a0<\/p>\n The current FOMC statement references language around \u201cadditional adjustments\u201d<\/strong> reflecting forward guidance<\/strong> put into the statement to signal a pause rather than an end to the easing cycle<\/strong>, she said.<\/p>\n \u201cUncertainty around the economic outlook has increased in 2026 and makes the future path for monetary policy more uncertain<\/strong>, as well,\u201d she said. \u201cI see this clear easing bias as no longer appropriate<\/strong> given the outlook.\u201d\u00a0<\/p>\n The Fed\u2019s dual mandate from Congress requires maximum employment and stable prices.<\/p>\n The eight-week Iraq war raises the prospect of prolonged or repeated supply disruptions that could create further inflationary pressures. At the same time, the labor market has been stable, with low unemployment and payroll job gains keeping pace with labor force growth, Logan said in her May 1 statement.<\/p>\n Related: Fed drops rate-cut bombshell<\/strong><\/p>\n When the FOMC gives forward guidance<\/strong> about the likely course of future interest rates, as in the recent post-meeting statement, that guidance is an important policy tool, she said, adding that households and businesses <\/strong>rely on the guidance to make future plans.\u00a0<\/p>\n \u201cWhen the FOMC gives forward guidance, it is important for that guidance to reflect the policy outlook,\u2019\u2019 Logan said. \u201cIn light of the two-sided risks to monetary policy, I believed the FOMC should not give forward guidance implying a bias toward rate cuts at this time<\/strong>.”<\/strong><\/p>\n Traders are currently pricing in the next interest-rate cut for mid-to-late 2027<\/strong>, according to the CME FedWatch Tool.<\/p>\n The Kalshi prediction market estimates a 43% chance of a Fed rate hike<\/strong> before July 2027.<\/p>\n Vinny Amaru, global investment strategist at J.P. Morgan Wealth Management, said in an email to TheStreet that the details coming out of the FOMC meeting were \u201cinteresting.\u201d<\/strong><\/p>\n \u201cWith the labor market showing some signs of stabilizing and higher oil prices contributing to elevated inflation, we see the Federal Reserve holding rates steady for the rest of the year,\u2019\u2019 he said.<\/p>\n Tony Welch, chief investment officer at SignatureFD, told TheStreet in an email that the multiple dissents are \u201csomething important: the Fed is no longer fully aligned on what comes next<\/strong>.\u201d<\/p>\n \u201cThe economy is holding up, supported by consumer spending and investment, but inflation remains sticky,\u201d he said. \u201cThat combination reinforces a Fed that we believe is likely to stay on hold for longer<\/strong> than many expected.\u201d<\/p>\n The next FOMC meeting is June 16-17.<\/p>\n Related: BNP Paribas flags rate outlook after divisive Fed vote<\/strong><\/p>\n #Hawkish #dissents #fuel #alarming #warning #Fed #rate #outlook<\/p>\n","protected":false},"excerpt":{"rendered":" The contentious clash of divergent opinions on the Federal Reserve\u2019s outlook on short-term interest rates has clarified with three regional bank presidents zeroing in on increasing uncertainty about the Iran… <\/p>\n","protected":false},"author":1,"featured_media":774,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[246],"tags":[2084,2083,674,546,2082,601,126,1239],"class_list":["post-1223","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-popular","tag-alarming","tag-dissents","tag-fed","tag-fuel","tag-hawkish","tag-outlook","tag-rate","tag-warning"],"_links":{"self":[{"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/posts\/1223","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1223"}],"version-history":[{"count":0,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/posts\/1223\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=\/wp\/v2\/media\/774"}],"wp:attachment":[{"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1223"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1223"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gw.adampg777.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1223"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Historic FOMC vote reflects 8-4 divide\u00a0<\/strong><\/h2>\n
![](\"https:\/\/www.thestreet.com\/.image\/NDA6MDAwMDAwMDAyOTQwMjAy\/thestreet_effective-federal-funds-rate_41326.jpg?io=1&profile=rss\")
<\/p>\n<\/figure>\nFOMC rate outlook divides voting Fed officials<\/strong><\/h2>\n
Hammock cites risk of economic uncertainty changing rate outlook<\/strong><\/h2>\n
Logan cites impact of Iran war on U.S. inflationary pressures<\/strong><\/h2>\n
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Investors outline future interest-rate path<\/strong><\/h2>\n