LIVE MARKETS-The Fed’s decision is due, how many policymakers will dissent?

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THE FED’S DECISION IS DUE, HOW MANY POLICYMAKERS WILL DISSENT?

The Federal Reserve is widely expected to cut interest rates when it concludes its two-day meeting later on Wednesday. A key focus for investors will be how many policymakers go on the record to disagree with the move.

Fed Chair Jerome Powell is expected to adopt a hawkish tone towards further rate cuts as he presides over a divided U.S. central bank in which many officials are concerned about elevated inflation.

The number and makeup of policymakers who dissent may also be key in how hawkish markets interpret the Fed to be.

“The focus this time around will be on the vote composition, with both hawkish and dovish dissenters expected,” foreign exchange analysts at CIBC Capital Markets led by Sarah Ying said in a note.

Two policymakers dissented at the Fed’s October meeting, with Fed Governor Stephen Miran calling for a deeper reduction in borrowing costs and Kansas City Fed President Jeffrey Schmid favoring no cut at all given ongoing inflation.

At this meeting, “it is the composition of the hawkish dissenters that will be more interesting,” CIBC said. “We expect Schmid and (St Louis Fed President Alberto) Musalem to dissent in favor of a hold. We are less certain on how (Boston Fed President Susan) Collins or (Chicago Fed President Austan) Goolsbee will vote – should either or both dissent as well, this could be a more hawkish signal for the market.”

(Karen Brettell)

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