Powell 'holds the key' to the next Fed rate move as divided policymakers will likely fail to reach a consensus again, JPMorgan says

"In his Jackson Hole speech on Friday, Chairman Jerome Powell opened the door to a rate cut at the central bank's meeting in September after months of maintaining a more hawkish stance, stoking a furious rally on Wall Street. His emphasis on growing risks to the labor market coupled with a more muted warning on the inflationary impact of tariffs marked a shift in his tone. But not everyone on the Federal Open Market Committee sounded as dovish, including Kansas City Fed President Jeffrey Schmid."

"While Powell counts as one vote on the FOMC, he carries outsized influence as the chairman and could prove to be decisive in another split vote. "Guidance from a range of Fed speakers was mixed this week, while the July minutes struck a modestly hawkish tone," JPMorgan economists led by Bruce Kasman wrote in a note on Friday. "A consensus decision in September looks unlikely, and it is Chair Powell who holds the key to the meeting's outcome.""

Jerome Powell signaled openness to a September rate cut after months of a hawkish stance, which triggered a strong rally in equity markets. Powell highlighted growing labor market risks and downplayed tariffs' inflationary impact, marking a change in tone. Federal Open Market Committee members remain divided, with some officials voicing more hawkish views. Previous meetings produced dissenting votes, and Powell's role as chair gives him outsized influence in split decisions. JPMorgan economists view a unanimous decision in September as unlikely. Hawks point to inflation above the 2% target and resilient data as reasons for continued division.

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