FOMC keeps rates on hold but three of four dissents are hawkish
The main surprise in the FOMC statement was the number of dissents, one dovish, Miran continuing to call for a 25bps easing, and three hawkish, with Hammack, Kashkari and Logan in agreement with the decision to leave rates unchanged but objecting to the inclusion of an easing bias.
This means three of the four rotating regional voters made hawkish dissents, the exception being Philly Fed’s Paulson, and it is likely some of the non-voting regional presidents hold similar views. That none of the permanent voters dissented is however significant, suggesting Warsh, who is likely to Chair the next meeting, may be able to count on a majority of votes, though once Warsh enters Miran will exit.
The easing bias is not strongly explicit, the statement repeating a reference to the extent and timing of additional adjustments, but the three hawkish dissenters appear to want it made clear that adjustments could go in either direction, something that recent minutes have suggested was advocated by some. In the assessment of the economy the statement is a little more hawkish, the qualifier on average added to the view that job gains remain low, and inflation now described as elevated rather than somewhat elevated, with energy prices now noted explicitly as a factor. The statement is also more explicit about the role developments in the Middle East are playing in contributing to high uncertainty.