Not every member of the FOMC is so sure.

Indeed, Deutsche Bank believes Fed chairman Jay Powell’s powers of diplomacy are likely to be tested this week with multiple members of the FOMC expected to dissent from the majority vote—with some members pushing to hold rates steady, while others favor more aggressive cutting.

Deutsche’s Jim Reid noted to clients this morning: “There is likely to be differing views within the committee. On the dovish side there could be three calling for a 50bp cut and possibly one or two voting for no change. It has the potential to be the first meeting where three governors dissent since 1988, and the first with dissents on both sides since September 2019.”

A gamut of perspectives on the FOMC is not unusual: After all, there are 11 people on the committee, with an additional five alternate members, further individuals on the board of governors, and economists from across the country also presenting their findings. Some difference of opinion is not only to be expected, but welcomed in order to paint a full picture of the economy.

But to have members disagree with policy so strongly that they vote against the consensus view is a signal to markets of tension at the highest level: If members of the FOMC aren’t on board with the plan, why should Wall Street be? As Bob Hetzel, formerly a senior economist to the Richmond Fed told NPR, dissent on the FOMC is “very discouraging and very disturbing to financial markets.”

With dissent a possibility but not a certainty, markets were relatively flat Monday morning. The S&P 500 was down a minor 0.048%, the Nasdaq up 0.44%. In Europe the FTSE 100 was flat, up 0.013% and the CAC 40 up 0.93%, while in Asia the Nikkei 225 was up 0.89% and the SSE down 0.26%.

The real market which is moving in anticipation of the Fed’s meeting is gold, now up close to 40% so far this year. However, UBS’s Mark Haefele points out that if the Fed resumes easing while price pressures remain, real yields will fall. As such, while the bank retains an attractive view on the asset, advising investors to retain a mid-single digit percentage of their portfolio allocations in gold.

Analysts expect a couple of FOMC members to be particularly vocal in advocating for a bigger rate cute: Governors Chris Waller and Michelle Bowman. Both dissented from the consensus at the last meeting and pushed for a cut, while the group on the whole voted for a hold.

Waller has lobbied for cuts for months now, advocating the Fed should “look through” inflation produced by President Trump’s tariff plan and instead focus on the underlying momentum of the economy, which he felt was slowing and would show up in employment figures.

At the time, speculators questioned whether Waller might simply be “auditioning” for the role of Fed chairman, with Trump making it clear that when Powell’s term ends next year he will be replaced by an individual with a less restrictive stance on interest rates. Trump’s pressure on the Fed has been the story of 2025 so far, with the Oval Office dubbing the chairman “Too Late” for thus far refusing to cut interest.

That argument has been bolstered by weaker data on the employment side: The economy added just 22,000 jobs last month, and Labor Department revisions also confirmed in the year to March 25, America added 911,000 jobs less than previously thought.

On the other hand, some members of the FOMC have advocated for a more patient approach on account of health in other parts of the economy. Kansas City Fed President Jeffrey Schmid told Fox Business last month that while monetary policy may currently be restrictive it is not “very restrictive,” he argued: “With stock prices near record highs and bond spreads near record lows, I see little evidence of a highly restrictive monetary policy.”

Powell’s tone

While Powell’s vote doesn’t technically count more than that of any other member, his stance as leader of the Fed will inevitably color the tone of discussions.

The chairman has of course so far pushed a “wait and see” approach, but as Bank of America questioned in a note Friday: “How hard has Powell pivoted?” Economists Claudio Irigoyen and Antonio Gabriel wrote: “The Fed has telegraphed a 25bp cut at its September meeting. Markets will look to the SEP and press conference to assess the pace and extent of cuts going forward. The macro forecasts in the SEP should look very similar to June. We think the 2025 and 2026 median dots will show 50bp of cuts each. Risks are for 75bp in 2025.

“Powell’s characterization of the labor slowdown (cyclical or structural?) and inflation (one-off or sticky?) will provide clues on his expected policy path.”

Gregory Daco, chief economist at EY-Parthenon has the same question. In a note Friday he echoed: “While markets are currently pricing in three rate cuts before year-end, we believe the Fed will proceed gradually. An October cut remains possible, but would likely require a negative—or near-zero—September payroll print.”

Here’s a snapshot of the markets globally this morning:

• S&P 500 futures were up 0.11% this morning. 
• STOXX Europe 600 was up 0.40% in early trading. 
• The U.K.’s FTSE 100 was fla, up 0.013%t.
• Japan’s Nikkei 225 was up 0.89%.
• China’s CSI 300 was up 0.24%. 
• South Korea’s KOSPI was up 0.35%%.
• India’s Nifty 50 was down 0.18%%.
• Bitcoin was down a little, to just below $115K.