This article is proudly sponsored by Lake Region State College!
The Fed Hit Pause Again—But Two Dissenters Just Flashed the First Real Signal of a Pivot
The Federal Reserve Just Blinked—Kind Of
For the seventh straight meeting, the Federal Reserve left its benchmark interest rate unchanged at 4.25%–4.50%. On paper? Yawn. In reality? The first real crack in the “higher for longer” wall just showed up—and it’s got dissent written all over it.
Two voting members of the Federal Open Market Committee—Chris Waller and Michelle Bowman—broke ranks and voted to cut rates by 25 basis points. That hasn’t happened since 1993. Not just one dissent, but two. And not from fringe regional Fed presidents—these are full-blown governors, appointed by Donald Trump, and reportedly in the running to replace Jerome Powell himself.
What’s the Fed Thinking?
The FOMC statement reads like a classic Powell remix:
-
Inflation? Still sticky.
-
Labor market? Still solid.
-
Outlook? Still uncertain.
-
Net exports? Dragging GDP, but we think the real economy is stronger than it looks.
In short, the Fed said: “Yes, things are slowing. No, we’re not panicking. Yet.”
They gave no forward guidance on cuts, just the usual boilerplate: “We’ll keep watching the data. Trust the process. Go Birds.”
But make no mistake—this meeting was anything but boring.
So… Did They Make the Right Call?
Honestly? Yes.
Here’s why:
-
Inflation is still above target. Core PCE has cooled, but it’s not where they want it. No central bank wants to declare victory too soon and get 1970s’d all over again.
-
The labor market hasn’t cracked. Unemployment is low. Wages are rising at a manageable pace. Until we see real deterioration—think rising jobless claims or a plunge in job openings—they’ve got breathing room.
-
Exports dragged GDP—but that’s not the Fed’s fault. Net exports were negative in Q2, but that’s more about global weakness than domestic demand. The Fed doesn’t want to cut just to bail out weaker trade numbers.
That said… dissent doesn’t come from nowhere.
Why the Dissent Matters
Bowman and Waller didn’t just raise their eyebrows—they raised the stakes. They’re saying: “Hey, maybe the soft landing is already here. Maybe policy is too tight. Maybe we should stop punishing the economy for sins it hasn’t committed lately.”
Also, let’s be honest: this is political. Both are Trump appointees. Both are rumored replacements if Powell gets bounced after the 2026 election. This might be their audition tape. (“What if we didn’t wait for Powell?”)
But that doesn’t make them wrong. It just means the Fed is officially in split-brain mode.
What Happens Next?
All eyes are now on the September meeting.
Between now and then, we get two more CPI prints, two more jobs reports, and a whole lot of hand-wringing. If inflation stays tame and the job market softens even a little, Bowman and Waller may pick up a few new friends at the table.
But if the data runs hot? Those two dissenters might stay lonely—and rates might stay exactly where they are until 2026.
Bottom Line
The Fed held steady today. But the dissent was loud, historic, and intentional. It doesn’t mean a pivot is guaranteed—but it does mean the conversation has officially changed.
And in Fed-speak? That’s basically shouting.
DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.
© 2025 MacroHint.com. All rights reserved