The Federal Reserve launched a bold 50 basis point rate cut on Wednesday, initiating the current easing cycle. However, based on their forecast for the dot plot interest rate path, this action may have only received the full support of a 'narrow majority' among the 19 Fed decision-makers.

Although in the monetary statement released by the Federal Reserve, the FOMC voter who opposed the 50 basis points rate cut decision was only the Fed Board Member Michelle Bowman. However, according to industry insiders' 'retrospective' of this decision in the 24 hours after the meeting, as many as 9 officials among the 19 Fed decision-makers may have expressed opposition to some extent or reluctantly agreed to this significant rate cut decision.

The Federal Reserve will release the minutes of the interest rate meeting on September 17-18 three weeks later, by then people may have a clearer understanding of the game behind the Fed's rate cut this time.

However, there are already clues indicating that the level of support for this week's rate decision is completely different from that at the Fed's meeting in July - at that time, Fed Chairman Powell stated, "all 19 " attendees supported maintaining policy rates stable.

Powell himself actually gave some hints after the meeting on Wednesday.

Powell said, "There is a lot of back-and-forth on this issue... Today's discussion is very good," Powell said, "I think the decision voted on by the committee has broad support. There are objections, different viewpoints, but actually there are many commonalities.

The "hawk king" Bowman is not alone.

On the surface, only Bowman clearly voiced opposition to the decision to cut interest rates by 50 basis points on Wednesday, marking the first time in 19 years that a member of the Federal Reserve Board voted against a rate decision. She was more inclined to a standardized 25 basis point interest rate cut. Previously, for at least a year, Bowman had repeatedly mentioned the reasons for maintaining a tightening policy for a longer period of time.

But in reality, Bowman may not be alone...

The details are hidden in the dot plot!

The latest dot plot released in September shows that as many as seven officials expect the federal funds rate target range to fall between 4.5% and 4.75% by the end of the year, indicating that they expect the Fed to cut rates only once in one of the last two meetings of the year.

The dot plot even shows that "two dots" (two decision-makers) believe that the Fed's policy rate in the second half of this year will not change.

Although these forecasts may indeed include officials who are willing to pre-emptively cut rates (cut rates significantly at first, then pause), analysts say that this is more likely to indicate that many policymakers - not just Bowman - initially hoped that the rate cut this week would be smaller. It is hard to imagine why so many people who support a significant rate cut this month would then believe that the next two meetings should not have a rate cut...

Undoubtedly, this more aggressive rate cut decision may open the way for the Fed to continue cutting rates significantly, but at least from the statements of some officials before the Fed's silent period, they may not "welcome this."

In fact, we have discussed the differences within the Federal Reserve before this month's interest rate meeting. As we mentioned before, from various details, it seems that Chairman Powell is a "dove" who wants to implement looser policies more forcefully within the current Federal Reserve. The recent rumors from the Federal Reserve's media outlets and the shift in market expectations before this interest rate meeting may not be the result of intense internal struggles within the Federal Reserve.

And with the Federal Reserve actually cutting interest rates by 50 basis points this month (105 of the 114 investment bank institutions in a pre-meeting media survey incorrectly predicted a 25 basis point cut), the differences within the Federal Reserve are receiving increasing attention from market participants.

Goldman Sachs economists wrote on Thursday, "The leadership of the Federal Reserve seems to be pushing for a larger scale of rate cuts." Goldman Sachs has now abandoned its previous predictions of a gradual rate cut and is instead supporting the result it now considers more likely: a 25 basis point cut at each of the Federal Reserve's next six meetings, continuing until June next year.

Tim Duy at SGH Macro Advisors also expects the Federal Reserve to cut rates by another 50 basis points before the end of the year to alleviate economic pressure, although he believes that many policymakers do not seem to think that the sluggish pace of job growth justifies an initial 50 basis point cut.

"Many people reluctantly supported the decision to cut rates by 50 basis points," Duy said. He pointed out the apparent divergence between the seven members who expect only another 25 basis point cut this year and the nine members who expect another 50 basis point cut, as shown in the dot plot.

"Powell has essentially pulled everyone towards a larger rate cut, but it appears that the cost he has paid is a downplaying of risks in the labor market," Duy said, noting that Powell did not emphasize labor market risks in the press conference. The Federal Reserve stated in its policy statement that the risks to employment and inflation goals are "roughly balanced."

Economists at Deutsche Bank also noticed the apparent divergence shown in the dot plot and the use of the term "broadly" by Powell to describe internal support for the 50 basis point rate cut. They stated that all of this further proves that it is a decision with evenly split opinions.

From the schedule, it is apparent that there will be a large number of Federal Reserve officials who will have the opportunity to express their latest views as the blackout period of the Federal Reserve comes to an end.

Philadelphia Fed President Harker will give a speech at the Freeman School of Business at Tulane University early Saturday morning Beijing time, and more Federal Reserve officials will also be on stage next week. Whether their latest statements can reveal more details behind this week's interest rate discussion, and how they will view the remaining interest rate space for the rest of the year, is undoubtedly worth investors' close attention.

Editor/ping