Dissents by Fed governors went out of fashion around 1995

The last time any governor cast a contrary vote on a decision by the Federal Open Market Committee was September 2005.

(For your next Fed trivia contest: That was Mark Olson, an appointee of President George W. Bush, who thought monetary policy should be more dovish.)

Have Fed governors fallen for groupthink? Is the U.S. economy vulnerable because the governors who set interest rates are marching in lock step instead of exercising independent judgment? Or is the number of dissents failing to capture the degree to which Fed governors think for themselves and exert independent influence on monetary policy?

If you’re looking to argue that the Fed suffers from too much unanimity, the inflationary surge of 2022 looks like evidence. It’s clear in retrospect that inflation was bubbling up starting in 2021, but it wasn’t until March 2022 that the committee approved its first increase in the federal funds rate. 

In speeches, various members of the committee had been expressing concerns about inflation, but they weren’t voting that way. 

Throughout 2021 and 2022 there was only one dissent by someone saying monetary policy should be tighter. That was James Bullard, then the president of the Federal Reserve Bank of St. Louis, in March 2022.

Peter Coy New York Times 15 January 2024

One chart is all it took to move financial markets

That chart was presented by St. Louis Fed President James Bullard and it shows where he sees “the sufficiently restrictive zone” for the central bank’s main policy rate target.

Bullard put the zone somewhere between 5% to 7%

Bullard’s zone was based on estimated policy levels recommended by Taylor-type rules

Englund: One chart is all it took to move financial markets (englundmacro.blogspot.com)