① The second meeting chaired by Walsh during his tenure appeared to feature a heated debate; ② according to dissent records maintained by the Federal Reserve Bank of St. Louis, no Federal Reserve Chair since the 1970s has faced such a significant wave of dissenting votes so early in their term.
When Kevin Walsh assumed the role of Federal Reserve Chair, he repeatedly expressed a desire for robust internal “family debates” within the Fed. This week’s two-day Federal Open Market Committee (FOMC) monetary policy meeting—the second he has chaired—appeared to deliver exactly that: a vigorous and contentious discussion.
According to the policy statement released by the Federal Reserve on Wednesday, three voting members of the FOMC—Loretta Mester, President of the Federal Reserve Bank of Cleveland; Neel Kashkari, President of the Federal Reserve Bank of Minneapolis; and Lorie Logan, President of the Federal Reserve Bank of Dallas—dissented from the decision to hold rates steady, favoring an interest rate hike at this meeting.
According to Nick Timiraos, often referred to as the 'Fed Whisperer,' this marks the first time since 2016 that the Fed has recorded three dissenting votes aligned in the same direction on a single policy decision.
An even more striking historical comparison emerges from longer-term data: according to FOMC dissent records maintained by the Federal Reserve Bank of St. Louis, no Federal Reserve Chair since the 1970s has encountered such a substantial wave of dissent so early in their tenure.
Note: The table compiled from records maintained by the Federal Reserve Bank of St. Louis lists the date of the first FOMC meeting at which a new Fed leader encountered dissent, the number of that meeting within their term, and the number of policymakers who voted against the decision on that day.
Although most Federal Reserve Chairs have faced some degree of dissent during their first year in office, few have experienced anything as dramatic as Walsh did last night.
Take Walsh’s predecessor, Powell, for example: Powell secured a string of unanimous decisions at the outset of his term, with the first dissent not occurring until June 2019—his 11th meeting as head of the central bank.
Janet Yellen encountered one dissenting vote at her very first meeting in March 2014, when the Fed’s benchmark rate remained near zero but introduced substantial new forward guidance—a move that drew opposition from then-Minneapolis Fed President Narayana Kocherlakota. However, overall, she faced relatively few dissents during her tenure.
A situation as challenging as Walsh’s at the start of his term must be traced back to the 1970s: Arthur Burns faced three dissenting votes at his first policy decision in February 1970. Paul Volcker encountered two dissenting votes at his first meeting and four at his second.
Since the 1930s, only one Federal Reserve leader has maintained a spotless record: Thomas McCabe presided over 19 meetings from May 1948 to March 1951 without recording a single dissenting vote.
Editor/Joe