Analysis: Powell is not the biggest obstacle to rate cuts, the Fed's internal consensus mechanism is on the brink of collapse

On November 22nd, "Fed Whispers" author Nick Timiraos wrote that President Trump stated this week that he anticipates a substantial rate cut after appointing a new Fed Chair next May. Nevertheless, within the Fed, the internal opposition to a rate cut in December is on the rise, suggesting that his desire may be difficult to fulfill. Whether Powell decides to maintain the status quo or cut rates in December, he is encountering the most serious internal resistance during his nearly eight-year tenure. This division is likely to persist into next year, meaning that even with a new Chair, it is not guaranteed that there will be more rate cuts. Some are worried that if Trump fails to get his way, he may take more extreme measures to weaken the Fed's independence in exchange for rate cuts. For more than 30 years, Fed Chairs have been striving to reach the broadest possible consensus on rate decisions, and no decisions have been made by a narrow majority. However, the December meeting is highly likely to see three or even more dissenting votes. Economist Krishna Guha of Evercore ISI stated that we are witnessing a breakdown in the decision-making process, and next year we may see a committee that is severely divided. The (December) meeting feels like a preview of 2026. This indicates an unprecedented situation: monetary policy outcomes may be determined by a very rare narrow majority (instead of the traditional pursuit of broad consensus over the years), and a new Chair appointed by Trump may not always be in control of the situation. (FXStreet)