The Federal Reserve has members with different views on monetary policy. Among the seven permanent voters, Powell, Barr, and Jefferson are neutral. Cook, Waller, Bowman, and Miran lean dovish. For the Fed presidents, Williams, Goolsbee, Paulson, Logan, and Barkin are neutral. Collins and Daly are dovish, while Musalem, Schmid, Bostic, and Hammack have hawkish views. Kashkari is neutral too.

Voting Patterns

Looking at voting patterns, there are five neutral voters, five dovish voters, and two hawkish voters. The neutral members tend to support two interest rate cuts in 2025. Dovish members are in favor of three or more cuts, while hawkish members prefer fewer than two cuts during the same time. With the current committee makeup, there is a strong tendency toward monetary easing in 2025. Ten out of the twelve voting members are in favor of two or more rate cuts, making it likely that interest rates will go down. Traders should prepare for a dovish policy shift, as the focus seems to be on the size of the cuts rather than their direction. This dovish outlook is backed by recent economic data. The Consumer Price Index report for August 2025 showed that year-over-year inflation dropped to 2.5%, getting closer to the Fed’s target of 2%. This slowdown allows dovish members to argue for starting the cutting cycle sooner. The labor market is also showing signs of softening, which helps support rate reductions. The August 2025 jobs report revealed that nonfarm payrolls expanded by only 150,000, and the unemployment rate increased to 4.2%. This combination of cooling inflation and a softer job market strengthens the case for policy easing.

Market Reactions

In the upcoming weeks, we can expect some volatility around comments from the two hawkish voters, Musalem and Schmid. Their differing opinions could create short-term price changes and opportunities in options markets, especially around their scheduled speeches. Traders can take advantage of these moments to go against any hawkish reactions, considering the strong dovish majority. Reflecting on the market shift in late 2023, we saw how quickly sentiment changed, benefiting those who prepared early for rate cuts in 2024. A similar situation may be developing now, indicating that taking positions in instruments like SOFR futures, which would benefit from lower rates in 2025, could be wise. Current pricing may not fully account for the three or more cuts indicated by the five dovish voters. It’s important to pay attention to the language from the five neutral voters, especially Chair Powell and Vice Chair Jefferson. Any change in their messaging from “two cuts” to a willingness for more cuts would be a significant trigger. Their comments during the next FOMC press conference will likely influence market sentiment for the rest of the year. Create your live VT Markets account and start trading now.

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