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🚨Powell struggles to maintain consensus, will a hawkish rate cut unfold?
The Federal Reserve is expected to cut rates this week, marking the third consecutive move this year, but Powell faces unprecedented challenges: inflation has not reached its target, yet employment remains persistently weak, and policy disagreements are intensifying. Three dissenting votes are anticipated in the meeting, potentially marking the end of the consensus era.
Powell is known for his ability to unite opinions, but as his reappointment approaches, dissenting voices continue to rise. Officials have differing views on the “neutral interest rate,” with doves advocating for job support and hawks insisting on controlling inflation, leading to a normalization of these disagreements.
This rate cut may be presented in a “hawkish manner”—emphasizing that only a modest easing is needed, and future rate cuts will be limited, in an effort to appease hawks. However, a greater suspense looms: Trump plans to nominate Kevin Hassett to take over, who advocates for significant rate cuts, potentially sparking intense conflict with the “anti-inflation camp.”
The market has priced in the rate cut, but the true test will not be this week, but next year—can the new chair navigate the divided FOMC? A larger storm is brewing. The rate cut is imminent, and Musk's pu p p I e s can take note🔥
