Episode summary
‘Silent Dissents’ Reveal Growing Fed Resistance to Powell’s Cuts
Bloomberg Surveillance
· · 5 min · Guests: Guneet Dhingra
Summary
Guneet Dhingra says the biggest signal from Wednesday’s Fed decision was the “silent dissent”: not just the formal dissenters, but a broader set of policymakers signaling resistance to more cuts. He argues that makes future easing “extremely hard” because the committee’s fractures are now visible in both votes and the broader debate over labor-market weakness, inflation, and the path of policy.
He also says Jerome Powell’s labor-market framework looks more pessimistic than before, including an assumption that payrolls are being overstated by about 60,000 a month. That shifts the market’s interpretation of the curve: Dhingra thinks the front end is reacting to what the Fed will do, but the long end is being pushed higher by growth, productivity, and a rising neutral-rate story, weakening the transmission of cuts across maturities.
Looking ahead to 2026, he says BNP Paribas expects the Fed to struggle to justify and vote through further cuts, penciling in only one cut next year versus the market’s two and a half to three. He adds that inflation is split into two camps inside the Fed, with one side looking through tariffs and the other focused on the recent 2.8% to 2.9% readings.
Key takeaways
- Dhingra says the Fed’s “silent dissent” shows future rate cuts will be “extremely hard” because committee fractures are widening.
- He says Powell’s labor-market view is more pessimistic, including a new assumption that payrolls are overstated by 60,000 a month.
- BNP Paribas expects only one Fed cut next year, versus the market’s two and a half to three.
- He argues dissent is weakening the rate-transmission mechanism, especially across the front end and the long end of the curve.
- Dhingra says the Fed is split on inflation between a tariff-adjusted camp and a camp focused on 2.8% to 2.9% readings.
Notable quotes
“The first, of course, is the silent dissent. I think what that tells you is, yes, the Fed has gotten three cuts in this year, but future rate cuts are going to be extremely hard”
“he mentioned he's subtracting 60,000 every month. And that was a new assumption for us”
“We have pencilled only one cut next year versus the market having two and a half to three”
“we do have for our forecast Danielle use going back to 450 next year”
“there is clearly two camps in the Fed around inflation. One camp that believes, I would say that the dovish camp, which wants to look at inflation, ex tariffs”
How the episode opens
I think there's a couple of things very notable in what happened yesterday. The first, of course, is the silent dissent. I think what that tells you is, yes, the Fed has gotten three cuts in this year, but future rate cuts are going to be extremely hard given the fractures and the differences in views on the committee.
And the second thing we picked up is Powell has had a relatively pessimistic view on the labor market numbers we have seen so far. So he mentioned he's subtracting 60,000 every month. And that was a new assumption for us.
Yeah, that's going for in a wang. Dr. Wong Well, joining us on that morning, the press conference here is consensus at the Fed important to you?
Is it important to the market or is the fact that we do have some dissents? I mean, that's a healthy environment. How do you how does a market think about that?
Yeah, I think if you look at the history of dissents, one or two sometimes really even three I probably you've seen before. If you look at yesterday, we're looking at possibly for $0.02 over and above the 2% that voted against it. I think the issue is if the front end is going to reflect, what the Fed will do below them is not reflecting what the Fed should do, and that's affected by dissent.
So the transmission mechanism of lower rates to lower rates is being weakened by those dissents. How do you interpret then, the seven spreads? I looked at the two stands three months, ten, three months, 30, I'm sorry, technically really buttressed up against new statements.
How should we interpret that into January? Yeah, exactly. I think this is exactly the question I think asked by one of the by the Bloomberg reports as well.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed dissent
- rate cut
- regional fed presidents
- ai macro
- policy projections
Companies and tickers mentioned
- BNP Paribas
Watch the episode
Watch “‘Silent Dissents’ Reveal Growing Fed Resistance to Powell’s Cuts” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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