The Double Dissent: Dallas’s Fisher and Philadelphia’s Plosser

Five for five: Today’s Federal Reserve meeting marked the fifth straight meeting with dissenting votes, the first time that has happened since the central bank started announcing its policy decisions in 1994. It was also the first time since September 2002 that more than one Federal Open Market Committee voting member broke from the group’s decision.

The dissenters this round: Richard Fisher, president of the Federal Reserve Bank of Dallas, who also dissented at January’s meeting; and Charles Plosser, president of the Federal Reserve Bank of Philadelphia. Both fall on the hawkish end of the spectrum — frequently voicing their concerns about inflation — and “preferred less aggressive action at this meeting,” the Fed said in its statement announcing the 0.75 percentage point cut in the federal funds rate to 2.25%.

Earlier this month, Mr. Plosser told reporters he saw “a good chance” the economy would begin turning around mid-year. And he devoted a speech last month in Alabama to his worries about inflation: “Ignoring price stability during times of economic weakness risks undermining our ability to achieve economic growth over the long run,” he said. “It fuels higher inflation down the road and risks inappropriate risk taking and recurring boom/bust cycles. This would be counterproductive.”

Mr. Fisher, the most hawkish FOMC member, has done little to hide is feeling about inflation. He used a recent speech to liken monetary policy to “a good single malt whiskey or perhaps truly great tequila.” He explained: “It takes time before you feel its full effect. The Fed has to be very careful now to add just the right amount of stimulus to the punchbowl without mixing in the potential to juice up inflation once the effect of the new punch kicks in.”

If you’re keeping score, each of the five Fed rate cuts since October has featured a dissent:

At January’s regularly scheduled meeting, Mr. Fisher preferred no change in the federal funds rate when the FOMC cut half a percentage point to 3%.

During January’s FOMC conference call, St. Louis Fed President William Poole dissented against the three-quarter-point emergency cut to 3.5% because he preferred waiting for the following week’s regular meeting.

Boston Fed President Eric Rosengren dissented during the December quarter-point cut, preferring a larger half-point reduction instead.

In October, Kansas City Fed President Thomas Hoenig wanted to hold rates steady when the Fed cut by a quarter point.

Fed Chairman Ben Bernanke has viewed the dissents as a healthy sign of a more democratic policymaking committee. That’s good, because the latest run of disagreement has broken all previous ones. The closest string of consecutive dissents came in four straight meetings in 2006 when Richmond Fed President Jeffrey Lacker wanted quarter-point increases when the federal funds rate was at 5.25%. The last time two Fed voters dissented at a single meeting was September 2002, when then-Dallas Fed President Robert McTeer and Fed governor Edward Gramlich preferred to lower the federal funds rate when the Fed instead held them at 1.75%. –Sudeep Reddy