Meetings of the Federal Open Market Committee are generally seen as staid affairs. Prominent economists and public servants gathered among leather and polished wood, exchanging restrained remarks studded with acronyms and Greek letters.
By any observable measure, the most recent FOMC meeting probably had the same feel. Except by Fed standards, this one was basically the Red Wedding, with Janet Yellen playing the “The Rains of Castamere” for some of the other members of the the policy-setting committee.
As expected, the Fed voted to keep rates unchanged Wednesday.
However, the vote was 7 to 3. Three members of the rate-setting committee voted to raise rates.
There haven’t been that many dissenting votes since December of 2014. Before that, Ben Bernanke faced three dissenters twice in a row during 2011. From there, you have to go back to 1992, when the first George Bush was still president, Last of the Mohicans was the #1 movie and Boyz II Men’s “End Of The Road” was the #1 song in the country. That’s also when Alan Greenspan faced off against 4 dissenters, the last time before 2011 when there were at least 3 “no” votes to a Fed policy announcement.
In retrospect, the dissent should not have been surprising. Esther George, Loretta Mester and Eric Rosengren voted against leaving rates alone; all three have spoken out for higher rates in recent public statements.
On the other side of the spectrum, there’s a group of three voting Fed members who do not want a rate hike this year.
Despite the dissenting votes, the market is pretty clear that rate hikes are not coming in the near future.
Trading in Fed fund futures currently points to a 14.5% chance of a rate hike at the Fed’s next meeting, scheduled for November 2. Going into the latest Fed decision, the market had priced in a nearly 21% chance of a hike by the end of the November meeting.
For December, the odds tell a different story. There is a currently an approximately 59% chance of a hike by the end of the Fed’s December meeting.