However, many expected several members to oppose the decision. And potentially in both directions. Some in favor of larger reductions; others in favor of the status quo.

In particular, the markets expected dissenting votes from Christopher Waller and Michelle Bowman, who had already voted against the status quo at the July meeting (they wanted a quarter-point cut). Even Stephen Miran remained relatively moderate, voting for a 50bp cut, while his boss wanted 100-to-150bp immediately.

Disagreement over disagreement

When you disagree with the position of the FOMC (the monetary policy committee), you have two strategies: vote against it or rally behind the majority decision to influence the discourse.

Here, we see both approaches at work. Miran opposes the majority decision but effectively breaks with the consensus, while Bowman and Waller attempt to shift it.

However, their influence is clearly visible in the statement, which is more dovish than anticipated. Compared to the previous meeting, there is a greater focus on employment: "The Committee is attentive to risks to both legs of its dual mandate and judges that downside risks to employment have increased," the statement reads. "Job growth has slowed and the unemployment rate has risen slightly."

These votes also contradict the idea that Donald Trump could have a majority within the Fed. This is an idea that has been widely discussed since he attempted to remove Lisa Cook from her position. If he were to succeed (even though recent court rulings have not been in his favor), four out of seven governors would have been appointed by him. Hence the idea of a "majority."

But this meeting clearly shows that Christopher Waller and Michelle Bowman are serious people; not Republican congressmen who push buttons on the president's orders. For several months, they have been calling for rate cuts, but with credible arguments to back them up: i.e. the risks in the job market. And subsequent events have proven them right, as data since the summer has shown a slowdown in the labor market.

The fog of clouds

In his speech, Jerome Powell was relatively cautious. He did not commit to a path of rate cuts, continuing to say that the Fed has a "meeting-by-meeting" approach.

This caution reflects the considerable uncertainty surrounding the economic outlook. As we explained yesterday, the US economy could be considered to be in a slowdown phase that requires rate cuts. However, it could also be argued that growth is resilient and that the slowdown is already underway. In this case, there is no urgent need to cut rates, especially since US equities are already at very high valuation levels.

There is also little certainty about inflation. Jerome Powell reiterated the position he expressed in Jackson Hole: tariffs should be a one-off shock to prices but should not reignite inflation. This is the Fed's central scenario, but Jerome Powell acknowledged that "it is also possible that the inflationary effects could be more persistent."

This considerable uncertainty surrounding economic forecasts is reflected in the Fed members' projections for key interest rates, known as dot plots.

Between now and the end of the year, a narrow majority believe that at least two rate cuts will be necessary. However, seven members do not foresee any further rate cuts, while one member believes that rates will be 125 basis points lower. These projections are anonymous, but there is little doubt as to the identity of this dove (a certain Stephen M., to give you a clue).

Summary of economic projections. Source: Federal Reserve

These forecasts are somewhat disappointing for the market, which was anticipating six rate cuts between now and the end of 2026 (before the meeting, i.e., including September), compared with only four for the median of the Fed members' projections.

A third term?

For the Fed, there is therefore no clear path forward. In recent months, inflation, which is already considered "somewhat high," has risen again, while the job market is showing signs of slowing down.

"There is no risk-free path... It's not obvious what to do," Jerome Powell acknowledged at a press conference. "We have to keep an eye on inflation while not ignoring... full employment."

The Fed must always consider these two mandates in its decisions, which is known in the jargon as the "balance of risks."

And as if finding this balance wasn't difficult enough, Stephen Miran has put forward the idea that the Fed has a third mandate: to maintain interest rates at moderate levels. He bases this on the Federal Reserve Act, which defines three objectives: "maximum employment, price stability, and moderate long-term interest rates."

This notion has now been taken up by the Trump administration in its quest for low interest rates, which is itself intended to reduce the cost of debt for the government.

The question was put to Jerome Powell at a press conference. In his view, Fed officials have not considered this third mandate to require "independent action" for some time. Moderate interest rates are simply the result of price stability and maximum employment.