Federal Reserve keeps policy rates unchanged with a whopping four dissents

The Federal Reserve kept its policy unchanged in a range of 3.5% to 3.75% in its April decision, as was universally expected by economists and prediction markets.

(Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.)

The central bank’s statement continued to point to the potential for a continuation of this easing cycle by the inclusion of the phrase “in considering the extent and timing of additional adjustments to the target rate.”

Ahead of this decision, event contracts pointed to a high likelihood that precisely one member would dissent at this meeting. That was wildly off the mark, with a whopping four members dissenting. Three of those did not want an easing bias; Governor Stephen Miran preferred a rate cut at this meeting. This marks the highest number of dissents since October 1992.

The SPDR S&P 500 ETF fell to session lows as traders digested the somewhat hawkish shift within the central bank, with two-year Treasury yields heading to their highs of the day and the US dollar strengthening. However, stocks managed to erase nearly all of their losses during the press conference.

The negative supply shock in oil stemming from the Iran war complicates life for the Fed by putting its inflation and employment goals in tension, and clearly causing division among policymakers.

The minutes from the central bank’s March meeting indicated that “most” participants thought a drawn-out war in the Middle East could weaken the labor market and warrant additional policy easing.

Since that time, however, American job growth crushed estimates in March and the US and Iran have reached a ceasefire. But the upward pressure on US retail gasoline prices continues — as does the lack of traffic through the Strait of Hormuz.

Traders think its roughly a coin flip as to whether the central bank has shifted gears to deliver a rate hike by about Q3 2027, but see less than one-in-five shot of any rate increases being delivered this year.

“I am not sure I remember a point in time in the last 10 years when there was nothing priced in either direction for a full twelve months,” wrote Brent Donnelly, president of Spectra Markets, head of this decision. “To get a greater than 50% chance of a move in rates, you have to scan all the way down to October 2027.”

During the press conference, Powell said he would stay on the Board of Governors for an indeterminant amount of time until the Justice Department’s criminal probe into the central bank is “well and truly over,” adding that he plans on keeping a “low profile” as a governor.