The Fed Is Fracturing

What It Covers

The Federal Reserve cuts rates amid unprecedented division, with six of twelve presidents opposing the decision, while introducing treasury bill purchases to manage liquidity.

Key Questions Answered

• •Fed Consensus Breakdown: Three official dissents plus four silent dissents through the SEP reveal six of twelve Fed presidents opposed the rate cut, marking the most contentious decision in nearly a decade with no clear forward guidance.
• •Labor Market Deterioration: Private sector data shows 1.1 million layoff announcements in 2024, the worst year since pandemic, with small firms cutting 120,000 jobs in November alone, while Powell estimates true job gains are negative 20,000 monthly since April.
• •Reserve Management Purchases: Fed launches 40 billion monthly treasury bill purchases through April, extending to three year maturities, providing marginal liquidity expansion while officially denying this constitutes quantitative easing despite balance sheet growth resuming.