Fed Chair Powell Doesn’t Need a Unanimous Vote to Cut Rates—But He May Want One

When the Federal Reserve meets next week, market participants will closely watch how members vote on interest rates to inform how policy may move in the months ahead — and they’ll take special note if the vote isn’t unanimous.

The fed funds rate has been at a more than two-decade high for more than a year, an effort to tame inflation that was spurred by the pandemic’s initial shocks. Recent reports have shown price pressures moving closer to the Fed’s 2% annual goal, causing several Fed officials to signal that it’s time to cut rates.

Fed Chair Jerome Powell will likely try to get everyone on board for at least a quarter-point rate cut when the central bank meets later this month. However, Powell and others may press for an even larger cut because of recent weakness in the labor market. 

“Fed Chair Powell does not need a unanimous consensus to commence rate cuts at the upcoming September meeting,” said Kathy Bostjancic, senior vice president and chief economist at Nationwide, in an email. “But he likely prefers to have it, especially for the first rate cut.”

FOMC Votes Are Often Unanimous, Even When There is Disagreement

The FOMC has 12 voting members, including the seven governors and five of the 12 regional bank presidents, who vote on a rotating basis. Votes at Federal Open Market Committee (FOMC) meetings are often unanimous, even when there is disagreement over the course of action.

The last dissenting vote at the FOMC came in 2022, when then-Kansas City Fed President Esther George voted against a three-quarter point interest rate increase, arguing instead for a smaller hike of 50 basis points.

Minutes from the most recent Fed meeting, in July, showed several members discussed cutting interest rates, but none dissented during the vote to keep current rates intact.

“Practically speaking, the committee members engage closely between meetings to work toward a consensus, but there are no guarantees,” said Jeffrey Roach, LPL Financial’s chief economist.

Getting all members of the Federal Reserve on the same page can help send a message to markets that Fed officials are in agreement about its actions. A divided vote could raise questions about whether the central bank believes it is taking the right action and what is motivating Fed officials.

“Consensus has been a way to keep the Fed from getting politicized,” Betsey Stevenson, a former Labor Department economist, wrote on X. “They can see what’s happening on the Supreme Court, and if I was on the FOMC, I think I would prioritize the fight for consensus.”

Powell Could Press For Bigger Rate Cut

While unanimity isn’t needed to proceed, it could boost market participants’ confidence in the Fed’s ability to keep a recession at bay. This could be relevant if Powell wants to push for an even larger half-percentage point rate cut at the September meeting.

“It would be difficult,” said Dan North, senior economist with Allianz Trade Americas, on whether Powell could rally consensus behind a larger interest rate cut. “It would be with a lot of dissent, and that would look bad.”

Powell may be willing to take that risk, wrote Diane Swonk, chief economist at KPMG.

“Powell is worried more about the labor market than his peers. He wants to nail a soft landing. The question is how hard he pushes for a half percent cut and how many dissents he is willing to take to get it,” Swonk wrote on X.