Michelle Bowman votes against Fed's half-point rate cut – first dissent since 2005

Federal Reserve Governor Michelle Bowman on Wednesday became the first Fed governor to vote against a central bank interest rate decision since 2005, denying Fed Chair Jerome Powell a clear consensus at a crucial moment.

The other 11 voting members of the Federal Reserve cast their votes in favor of reducing the Fed's policy rate by half a percentage point.

Bowman, the Fed said, preferred a quarter-point rate cut.

Of the 19 Federal Reserve policymakers who participate in each two-day rate-setting meeting, only 12 cast a vote on the decision.

These include eight permanent voters, including all seven members of the Federal Reserve Board and the president of the New York Fed, and the remaining 11 Fed presidents exchange one-year turns at the polls in groups of four.

Before 1995, dissents by Federal Reserve governors were not uncommon, but since then it has been Federal Reserve chairmen who have issued the overwhelming majority of the more than 90 dissents in that period.

Federal Reserve chairmen generally seek consensus in their decisions, sometimes compromising to avoid open disagreements that could be seen as undermining their credibility.

“I think we're a consensus-driven organization,” Federal Reserve Chairman Jerome Powell said after the July rate-setting meeting, where the group reached its 17th consecutive unanimous rate-setting decision.

During the pandemic, dissent was rare.

“We felt more united because we felt a lot of pressure to get things right,” Powell said at the time, “but before the pandemic, we had a lot of dissent. And dissent happens. It’s part of the process. There’s nothing wrong with dissent, and if it happens, it happens.”

Indeed, decisive moments in Federal Reserve decision-making are sometimes marked by dissent.

In June 2022, Kansas City Federal Reserve President Esther George expressed what until Wednesday had been the most recent dissenting comment.

She had argued for a smaller rate increase, but her colleagues opted for a 75 basis point hike to combat accelerating inflation.

It was the first in a series of four large movements, the rest of which George ended up supporting.

The dissenters “clearly indicate that they are not undergoing ‘groupthink,’” ING economist James Knightley said ahead of the meeting. “There are many risks to balance and[the dissenters]would suggest that difficult discussions are taking place.”

Before the Fed's decision, financial market bets were in favor of a half-percentage point rate cut; Wall Street analysts were mostly expecting a quarter-point cut.

Bowman has made a practice of publicly diverging from the Federal Reserve Board majority on regulatory issues, with frequent and repeated calls for softer treatment of banks.

Over the past year, he has also emerged as one of the Fed's most hawkish voices on monetary policy, supporting a higher policy rate for longer than most of his fellow central bankers to ensure inflation is fully defeated.

Bowman's dissent on Wednesday was the first by a Fed governor in a hawkish direction — that is, in favor of tighter, rather than looser, monetary policy — in nearly 30 years.

Below is a sampling of some notable dissents in recent Federal Reserve history.