🤡 House Collapse! The Federal Reserve's "technocratic officials" cast a political vote late at night, just to "show loyalty" to Trump?

🎬 Script Perspective: Last night, on the Federal Reserve’s policy meeting table, a carefully orchestrated “Loyalty Test” quietly unfolded. A technocrat who should have based decisions on cold data suddenly reversed course and cast a politically calculated opposition vote. The script was already written, the audience was the person in the White House, and the price could be the loss of the market’s last trust in the Fed’s independence.

Overnight, the Federal Open Market Committee decided to keep interest rates unchanged with a vote of ten in favor and two against. Among the two dissenters advocating for an immediate 25 basis point rate cut, one member’s action triggered the deepest market doubts. This member stood on the same side as another colleague seen as a close White House ally.

Market analysis quickly captured this subtle change. On a well-known forecasting platform, the probability of this member becoming the next Fed Chair nearly doubled after the vote results were announced, jumping from 8% to 15%. The White House had previously made it clear that it would prioritize candidates who could bring lower rates. Columnists pointed out that this dovish dissent was unmistakably aimed at pleasing the President. However, this choice severely damaged the reputation of the member as a data-driven technocrat and posed a challenge to the Fed’s institutional independence.

Further commentary suggested that this decision was more of a “political performance” than a result of rigorous economic analysis. Although long supporters of this member believed he was the best choice to maintain central bank independence, they also had to admit that his image was now shadowed.

From a purely economic perspective, this dissent lacked a solid foundation. Analysts believe there is no urgent reason to push for a rate cut through dissent. Even with adjusted tariffs, inflation remains slightly above the policy target. Meanwhile, strong GDP data and a stable labor market have eliminated the urgency for immediate action.

Additionally, the Committee’s current policy stance is already within a reasonable “neutral” range. The estimated neutral interest rate is between 2.6% and 3.9%, and after three rate cuts, the current range of 3.5% to 3.75% falls right within this range.

The member’s actions also seem to diverge from his own principles. He explicitly stated in a July interview that dissent must be based on “something very important at this moment,” and warned against becoming a “serial dissenter.” Yet, in the last two meetings where he failed to get his way, he cast dissenting votes. Unlike his colleague, who has long been labeled as a consistent opponent, this was his first time opposing the majority, deepening external doubts about his motives.

Analysis emphasizes that fierce debate within the Fed has value, but only if dissent is “strictly rooted in economics,” otherwise it risks becoming “political calculation.”

Despite criticism of this vote, some market observers still see this member as a strong contender for the Chair position, praising his communication skills and his early warning of inflation risks in 2021, as well as his economic judgment in 2022 advocating high interest rates to curb inflation without triggering a recession. But analysis also clearly states that this vote “does not look like one of his more glorious acts.” This suggests that even if the Fed’s independence is ultimately preserved, the institution “will not emerge unscathed.”

In conclusion, this kind of pressure and unorthodox selection process—forcing candidates into near servility—may ultimately put the right person in place, but the process will leave an unflattering mark in history.

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