tl:dr - A significant change is now underway at the Fed. Monetary policy is no longer about what the Chairman thinks/wants. It's about tallying the 12 voters' opinions and seeing which view reaches 7 (a majority). If the Chairman disagrees, there might not he much he can do about it. This accounts for the probability of a rate cut on December 10th falling from 70% on Monday to 42% on Friday, in a week that saw no significant economic releases and with the Federal Reserve chairman not speaking. The tally of voters is swinging against another rate cut. This is a very good thing, as the groupthink/consensus voting led by the Chair has been the Fed's biggest problem. It is behind so many policy errors. Hopefully, it is gone for good. === The chart below shows that the probability of a Fed rate cut at the December 10th meeting went from 70% on Monday to 42% on Friday. There were no major government data releases, as the Government was still closed until Wednesday, and the Federal Reserve chairman did not speak this past week. What drove this shift in the outlook for policy? The repost below seems accurate. * 4 voters are arguing for another rate cut (with Miran arguing for at least a 50 bps cut). * 5 voters are arguing for holding rates steady * 3 voters are either neutral or unclear (so far) on how they will vote. This includes Chair Powell. For 40 years, Fed policy was effectively set by one person, the chair. The monetary policy vote was typically 12-0 or 11-1. The Fed justified this unified front by saying it reduced market uncertainty, thereby making it more effective. Now this is changing, and so is the market’s view of the Fed. With higher-than-normal uncertainty, the market is pricing a 50/50 chance of a cut. Normally, these odds are much closer to 0% or 100% when a meeting is less than a month away. What Changed? We would argue Trump’s constant bashing of the Fed/Powell and Fed Governor Miran’s vocal arguments for a 50 bps cut appear to be breaking the 40-year stranglehold the Fed chair has had over committee voting. No longer are the 12 FOMC voters going to fall in line with the chair’s desires. They are quickly considering themselves truly independent voters and will vote as they see fit. Maybe Fed Governor Stephen Miran is leading the way. If he can ignore the Fed groupthink and act completely independently, publish blog posts explaining his rationale, and do numerous interviews to explain his opinion, then why can’t everyone else? The result is 12 truly independent voters. This is how every other major central bank and the Supreme Court operate. If this is truly happening, it marks the end of the Fed’s unanimous voting. Recognizing Mistakes Independent voting does not mean the Fed will make better initial decisions. It means voters will quickly recognize their mistakes and change. This is how markets and successful people operate. They are quick to correct mistakes, not rationalizing or justifying them. This might be why, after two rate cuts, the Fed could be done. The irony is that, by attempting to stack the odds in his favor by appointing his people, Trump may have made the Fed more independent. His carefully handpicked successor to Powell might not be able to deliver on the 1% funds rate he truly wants (unless the data changes and justifies it). The next Fed chair has been reduced to just one of 12 votes.(Jim Bianco)