Chair Jerome Powell has achieved a near-perfect consensus as the U.S. Federal Reserve raised interest rates aggressively. Now, with the hiking campaign drawing to a close, that agreement is going to be a lot tougher to maintain.
With inflation as high as 9% in the past year, Powell’s colleagues were all-in on the fight to curb price pressures, with another 25 basis-point hike expected Wednesday that might be the concluding increase. Yet that consensus is already showing signs of splintering, amid inflation that remains too high while Fed staff — and many private economists — see a recession in coming months.
Since COVID-19 threatened the U.S. economy in early 2020, Powell has secured more than 98% of the Federal Open Market Committee’s votes in favor of his actions, first to stimulate growth during the recession and then to fight inflation in the past year. Rising dissents are more likely as the choices of battling inflation or much higher unemployment become more troubling.