Wall Street is looking ahead to a highly anticipated meeting of Federal Reserve policymakers, who are widely expected to lower interest rates for the first time this year amid relentless pressure from the White House and deteriorating employment data.<\/p>\n
The Federal Open Market Committee\u2019s two-day meeting will start on Tuesday. On Wednesday afternoon, it will announce its policy decision. According to CME\u2019s FedWatch tool<\/a>, markets are pricing in 96.4% odds for a quarter-point cut and 3.6% odds for a half-point cut. The benchmark rate is currently 4.25%-4.5%.<\/p>\n The rate announcement will also be accompanied by a so-called \u201cdot plot\u201d of fresh forecasts on rates, inflation and GDP growth from Fed officials. Chairman Jerome Powell will hold a press briefing soon afterward.<\/p>\n While there is little doubt about the outcome of the Fed meeting, there are still questions over who exactly will be voting\u2014setting up some very awkward dynamics.<\/p>\n Stephen Miran: why not both?<\/p>\n Senate Republicans hope to confirm Stephen Miran as a Fed governor on\u00a0Monday so that he can participate when the meeting starts on Tuesday. <\/p>\n His decision not to resign from his White House economic adviser role while he serves on the Fed board and instead take a leave of absence is unprecedented, with critics saying it leaves him too vulnerable to pressure from President Donald Trump\u2014who is already trying to fire Fed Governor Lisa Cook.<\/p>\n Miran has also previously criticized the Fed\u2019s consensus-based approach and accused it of \u201cgroupthink.\u201d Before joining the administration, he proposed reforms that would weaken Fed independence and argued that monetary policy would be better served with some arguments. <\/p>\n Will he tear into his new coworkers on his very first day?<\/p>\n Either way, get ready for more contested votes rather than the typical unanimous decisions. In a note on Friday, JPMorgan chief U.S. economist Michael Feroli said he expects\u00a0the upcoming meeting to feature two or three dissents for a larger cut.<\/p>\n At the Fed\u2019s last meeting Fed governors Christopher Waller and Michelle Bowman broke from other policymakers by calling for a quarter-point cut. It\u2019s possible they could dissent again by voting for a half-point cut, Feroli said, with Miran expected to\u00a0\u201cdutifully dissent for a larger cut\u201d as well.<\/p>\n It remains to be seen how long Miran\u2019s Fed tenure will be. But in a note last month, JPMorgan said\u00a0his appointment to the Fed<\/a>\u00a0\u201cfuels an existential threat as the administration looks likely to take aim at the Federal Reserve Act to permanently alter U.S. monetary and regulatory authority.\u201d<\/p>\n Lisa Cook: \u2018Fed independence would be over\u2019<\/p>\n The other question mark is whether Cook will be at the FOMC meeting. After Trump took the unprecedented step of firing her, claiming mortgage fraud, she sued to stay in her post. Cook denied the accusations and said Trump\u2019s attempt to oust her is illegal. <\/p>\n In addition to Trump, Cook\u2019s lawsuit also named the Fed\u2019s board of governors, including Powell, as defendants. While her Fed colleagues weren\u2019t involved in her dismissal, Powell was named in the suit \u201cto the extent that he has any ability to take any action to effectuate President Trump\u2019s purported termination of Governor Cook.\u201d <\/p>\n A federal court sided with Cook, saying she can serve while litigation plays out, and new evidence has emerged<\/a> that undercuts Trump\u2019s accusations against her. But the Trump administration is fighting the decision in an appeals court. <\/p>\n Over the weekend, lawyers for both sides filed fresh arguments. The administration said<\/a> it seeks to\u00a0ensure \u201cthe integrity of the Federal Reserve.\u201d Cook\u2019s team<\/a> said Trump has not shown sufficient cause and that a ruling in his favor would mean he could fire other governors on \u201csimilarly flimsy pretexts.\u201d<\/p>\n \u201cThe era of Fed independence would be over. The risks to the nation\u2019s economy could be dire,\u201d the filing said.<\/p>\n If Cook is cleared to take part in the FOMC meeting, it may be awkward to discuss monetary policy with people she is also suing. But as central bankers prioritizing the Fed\u2019s dual mandate, they are likely to consider it business and not personal.\n<\/p>\n