Guess you had to be there because the last time two Fed Governors dissented, Meatloaf had the number one song (“I Would Do Anything for Love, But I Won't Do That)", Robin Williams had the number one movie (Ms. Doubtfire), and The Real Boss™ was just learning to drive (legally). December 1993.
Those two dissents today will dominate headlines, but I’m not sure how much it matters when you consider all the jockeying to be nominated as Fed Chair.
This was a kinda sorta dovish statement, but a hawkish Powell presser. Remember, the Fed’s dual mandate is labor and inflation. Here’s his take on these two things:
Labor - “not weakening” and “in balance”
Inflation - “Inflation is further from our goal than employment” and “you could argue we are already looking through the one time price effects because we aren’t raising rates”
He did mention slower overall growth and “there’s no question consumer spending has slowed”, but also noted:
- “Consumer spending had been very, very strong and maybe now it has finally slowed down”
- “Credit card companies will tell you consumers are in good shape”
The media asked about a dozen different ways if we can expect a September rate cut and he didn’t trip up.
Front end rates are up 7bps, while the T10 is up 5bps. The odds of a cut in September are down to 50/50.
We get two inflation reports and two jobs reports before the next Fed meeting, so there is plenty of opportunity to react to evolving data.
Heck, we get Core PCE tomorrow and jobs on Friday!
Trump demanded today that Powell, “MUST NOW LOWER THE RATE!”, but I can only assume Powell’s response will be, “I would do anything for love, but I won’t do that!”
PS - that last time we had two Governor dissents? The Fed hiked at the very next meeting.
