US Fed July Meeting May See Rare Dissent, Experts Say No Need for Investors to React

Seventh Report Financial News APP has learned that the US Federal Reserve's July policy meeting may end with a rare scene: two committee members voting against keeping interest rates unchanged. This would be the first time since 1993 that more than one member of the Federal Open Market Committee (FOMC) has dissented from a decision. However, market veterans warn that even if this happens, investors should not react too strongly.

Despite President Trump and his allies exerting immense pressure on Fed Chairman Powell to cut interest rates quickly, the market generally expects the meeting to maintain rates. However, some analysts point out that current Fed members Harker and Bowman may vote against maintaining the status quo and instead support a rate cut.

According to media reports, if this scenario plays out, it would be the first time in over five years that more than one committee member has dissented from a rate decision. It would also be the first time in nearly 30 years that two permanent voting members have simultaneously dissented.

In normal circumstances, such dissent would signal a shift in the Fed's stance and predict a rate cut at the next meeting. However, Sevens Report Research editor Tom Essaye noted on Tuesday: "This is not a normal time."

He emphasized that if Harker or Bowman vote against maintaining rates, the market may not react strongly because both are seen as potential successors to Powell. Powell's chairmanship will end in May next year, and Harker and Bowman's support for a rate cut could be viewed as a "political gesture" rather than a genuine economic decision.

"Whether their true motives are political or not doesn't matter," Essaye said. "What matters is how the market perceives this behavior." He also stressed that if media reports suggest that dissent represents a shift in the Fed's stance, or predicts a rate cut in September, it should be taken with a grain of salt, as it won't change the market's expectations.

In fact, since Powell took office, the Fed has maintained high unity. According to Pictet Asset Management Company's strategist Steve Donze on X-Platform, from the data, the FOMC under Powell is historically one of the most consensus-driven committees.

Despite a strong rally in US stocks over the summer, the S&P 500 index ended its six-day winning streak, dipping 0.30%, while the Dow Jones index fell 0.46% and was near its historic high set in December last year.

Meanwhile, as investors prepare for this week's Fed meeting and the upcoming July nonfarm payroll report on Friday, US Treasury yields plummeted sharply. The 10-year Treasury yield fell by 8.9 basis points to 4.329%.

Regardless of whether actual dissent occurs, the debate between "doves" and "hawks" within the Fed will intensify. Strategists Thierry Wizman and Gareth Berry at Morgan Stanley noted: "We have repeatedly emphasized that doves are justified in pointing out some signs of weakness in the US economy, which is why they may vote against keeping interest rates unchanged."

They also believe that the possibility of a rate cut in September remains high, while the possibility of at least two rate cuts by December cannot be ruled out.

According to the CME FedWatch tool, the market is currently pricing in a 65% probability of a rate cut by September and around 65% chance of at least two rate cuts by December.