MacroScope

Dissents at the Fed: 435 and counting

August 26, 2011

Think three dissents at the consensus-loving Federal Reserve are a lot? Try 435. According to St. Louis Fed President James Bullard, that’s how many dissents have been logged since 1936 by U.S. central bank policymakers unhappy with the decisions of the majority of their colleagues.

Internal disagreement at the Fed is unquestionably high, so much so that Fed Chairman Ben Bernanke on Friday said policymakers would meet for two days in September, not just one, to discuss their options more fully. Three regional Fed presidents — Dallas Fed’s Richard Fisher, Philadelphia Fed’s Charles Plosser, and Minneapolis Fed’s Narayana Kocherlakota — cast their vote against the Fed’s decision earlier this month to freeze short-term interest rates for two years.

“It depends a lot on the personalities involved, it depends a lot on the situation,” Bullard said of why some decisions draw more dissents than others. Bullard, who does not have a vote this year on the Fed’s policy-setting committee, said he also would have dissented, as did Kansas City Fed President Thomas Hoenig, the host of the annual Jackson Hole meeting of central bankers.

But Bullard said it would be wrong to think that the panel always splits between regional Fed presidents and the Washington-based Fed Board members, who are often seen as more closely aligned with the chairman. Over the years dissents have split nearly evenly between the two groups, he said.

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