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The Dissent: Fisher Stands Alone

June 25th, 2008 | Wall Street Journal



The string of dissent at the Federal Reserve continues, but the duet has become a solo.

Today marked the seventh straight Federal Open Market Committee meeting drawing at least one dissent. Dallas Fed President Richard Fisher was the only opposing vote in the 9-1 decision to keep the federal funds rate at 2%. Fisher has been vociferous in his warnings about the inflation risks, and has dissented on all four of the decisions on which he has had the opportunity to vote this year.

Fisher

Earlier this month in a speech to the Council on Foreign Relations, Fisher said that the central bank “will not countenance building inflationary expectations.” He fretted that higher energy costs and a rising cost of living are working their way into the public perception of its spending power. He told his audience that his personal preference would have been for a federal funds target rate of 3.5%.

While Fisher continued his dissents, the majority did add one vote to its tally. Philadelphia Fed President Charles Plosser stopped his string of opposition at two, deciding to vote for an unchanged rate of 2%. It appears that Plosser was satisfied with stopping the cutting cycle, and doesn’t think the inflation fears warrant an increase in rates yet.

The March meeting, featuring the fifth straight vote with a dissent, already broke through the longest string of opposition that had been on record. That was 2006, when Richmond Fed President Jeffrey Lacker voted four straight times for quarter-point hikes while the Fed held the federal funds rate at 5.25%.

The tally before today:

  • Fisher and Plosser issued their second straight double dissent in April, preferring no move on rates.
  • March’s double dissent by Fisher and Plosser, preferring “less aggressive action” than the Fed’s 0.75 percentage point cut to 2.25%.
  • Mr. Fisher’s dissent at January’s regular meeting, preferring no change while the FOMC cut by half a point to 3%.
  • St. Louis Fed President William Poole’s dissent during January’s conference call, preferring that the Fed wait until the following week’s regular meeting. The FOMC cut by three-quarters of a point to 3.5%.
  • Eric Rosengren, president of the Boston Fed, wanted a half-point cut at the December meeting when the Fed chose a quarter-point reduction.
  • Kansas City Fed President Thomas Hoenig preferred to keep rates unchanged in October when the Fed instead cut by a quarter point.

    • –Sudeep Reddy and Phil Izzo

    2 comments ↓

    #1 federal reserve richmond : federal reserve on 06.28.08 at 12:55 pm

    [...] The Dissent: Fisher Stands AloneThe string of dissent at the Federal Reserve continues, but the duet has become a solo. Today marked the seventh straight Federal Open Market Committee meeting drawing at least one dissent. Dallas Fed President Richard Fisher was the … [...]

    #2 st louis federal reserve : federal reserve on 06.28.08 at 7:35 pm

    [...] The Dissent: Fisher Stands AloneSt. Louis Fed President William Pooles dissent during Januarys conference call, preferring that the Fed wait until the following weeks regular meeting. The FOMC cut by three-quarters of a point to 3.5%. Eric Rosengren, president of … [...]

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