The number of hawkish votes on the Fed may increase to at least three next year

Annual changes to the composition of the Fed’s FOMC next year could slightly increase resistance to further rate cuts. The incoming members are more hawkish than the outgoing members. “It opens the door for more dissenting votes next year,” said Oscar Munoz, an analyst at TD Securities. At the December FOMC meeting, four of the Fed’s 19 policymakers wrote down forecasts that the rate cut was inappropriate, with Cleveland Fed President Hammack as a dissenting vote. Hammack will exit the FOMC next year and be replaced by Chicago Fed President Goolsbee, who believes the policy rate needs to be cut sharply next year and is clearly more dovish than Hammack. But two other new voters — St. Louis Fed President Musalem and Kansas City Fed President Schmid — will make the 2025 vote more hawkish, replacing Atlanta Fed President Bostic and San Francisco Fed President Mary Daly, who are seen as centrists. TD Securities analysts speculated that Mousalem was one of four policymakers who submitted forecasts opposing this rate cut, and another may be Schmid. Both have hinted that there is some hesitation about further rate cuts. The fourth may be Fed Governor Bowman, who opposed a 50 basis point rate cut in September but may switch to support this week's rate cut during the two-day meeting. (Jinshi)