Analysis: Powell is not the biggest obstacle to interest rate cuts, the Fed's internal consensus mechanism is on the brink of collapse.

On November 22, “Fed mouthpiece” Nick Timiraos wrote that Trump said this week he expects interest rates to drop significantly after appointing a new Fed chair in May next year. However, opposition within the Fed to a rate cut in December is growing louder, which means his wish may be difficult to realize. Whether Powell chooses to hold steady or cut rates in December, he faces the most serious internal resistance in nearly eight years of his tenure. This divergence may continue into next year, meaning that even if a new chair is appointed, it does not guarantee more rate cuts. Some worry that if Trump does not get his way, he may resort to more radical measures to undermine Central Bank independence in exchange for rate cuts. For over 30 years, Fed chairs have sought to achieve as broad a Consensus as possible on interest rate decisions, and no decisions have been made by a slim majority. However, the December meeting is likely to see three votes or even more against. Evercore ISI economist Krishna Guha stated that we are witnessing a breakdown in the decision-making process, and we may see the committee seriously divided next year. (December) feels like a rehearsal for 2026. This suggests an unprecedented outlook: monetary policy outcomes may be decided by a very rare slim majority (instead of the longstanding tradition of seeking broad Consensus), and the new chair appointed by Trump may not necessarily be able to control the situation every time. ( Jin10 )