The Fed’s Two-Day Meeting Starts Today—Here’s What You Need to Know

The Federal Reserve seems likely to cut interest rates again this week, but it probably won’t do so as a united front.

Fed officials are split on whether the economy needs lower interest rates, a debate that starts Tuesday and will also be on display when the Federal Open Market Committee’s decision comes out at 2 p.m. ET Wednesday. 

The more dovish FOMC officials are likely to prevail. The Fed is widely expected to cut its benchmark rate by 25 basis points to a range of 3.5% to 3.75%, amid signs that the job market is softening.

Analysts don’t expect it to be a complete defeat for the FOMC’s hawks, a couple of whom are likely to vote against a rate cut.

In laying out the path for 2026, economists say Fed Chair Jerome Powell could tamp down expectations that the central bank is gearing up for continued easing. It may be, as analysts call it, a hawkish cut. 

“Chair Powell is facing the most divided committee in recent memory,” Bank of America economist Aditya Bhave wrote in a research note. “Therefore, we think he will attempt to balance the expected rate cut with a hawkish stance at the press conference.”

Powell is scheduled to address reporters at 2:30 p.m. ET, where he will present the reasoning behind Wednesday’s decision and take questions on the path ahead.

He won’t have to do all the talking. Fed officials will also release their individual projections for 2026, which will lay out whether they’re leaning toward lowering rates again—and if so, how many times. 

Fed officials have been split recently. Some see a bigger risk of unemployment rising and argue lower rates would give the economy a needed boost. Others see more strength in the economy as consumers continue to spend, and they argue that making borrowing cheaper could stoke inflation. 

“The meeting looks set to be highly contentious,” Michael Pearce, chief U.S. economist at Oxford Economics, wrote in a note to clients.

A Few Dissents Possible

The disagreements may show up in Wednesday’s vote count, with analysts expecting dissents in both directions.

Fed Governor Stephen Miran voted for a larger 50 basis point cut at October’s meeting—and is expected to do so again. Miran, who is President Donald Trump’s latest Fed appointee, says rates are overly high and tamping down growth.

At least a couple of more FOMC officials may also vote against Wednesday’s action, though from the opposite direction. Kansas City Fed President Jeffrey Schmid dissented in October and favored keeping rates unchanged. A few other Fed officials seem to be leaning in that direction, but it’s unclear how many would vote against a rate cut.

Barclays Economist Marc Giannoni expects at least three dissents, which would be the most since September 2019. If a fourth FOMC official votes against the decision, it would be the largest dissent tally since October 1992, Giannoni wrote.

It’s also possible that the Fed, which tends to operate on consensus, ends up in closer alignment with the FOMC’s public vote even if the debate is heavy inside the room.

“The committee will try to present a united front amid the disagreements,” Oxford Economics’ Pearce wrote.

Parsing the Statement

It may help that the FOMC’s statement may end up tilting a little hawkish, potentially signaling a slower pace of rate cuts in 2026 and thus giving the hawks a victory.

“To help appease voters who are reluctant to cut again at this particular meeting, we expect the statement to signal a higher bar of additional rate cuts,” Wells Fargo Economist Sarah House wrote in a research note.

The change may seem small and cosmetic, but it could help Powell corral more votes and give investors a clearer sense of what’s ahead in 2026.

Right now, the FOMC statement indicates officials are debating “additional adjustments” to the federal funds rate—signaling a clear preference toward cutting.

To tamp down that language, analysts say the Fed may insert a line it has used in the past, saying it’s considering “the extent and timing” of additional adjustments. Translation: More cuts are likely to come, but the number and timing are unclear. 

Reading the Dots

Fed officials will also make their leanings clear through their forecasts, where their individual views on where rates should be by year-end are represented as anonymous dots. 

Their most recent projections, released in September, showed the median Fed official was penciling in one more cut in 2026 and another in 2027.

Barclays’ Giannoni doesn’t expect a major change in the dot plot, which he wrote will “again reveal considerable disagreement” at the FOMC on whether lower rates are necessary. 

BofA’s Bhave expects the 2027 cut to get pulled forward to next year, with a median dot suggesting two cuts in 2026 and “an extended hold at 3.0-3.25% thereafter.” 

He also, however, cautioned against the risk of overinterpreting any hawkish messaging from Powell, no matter what the dots show. The Fed chair, he noted, seemed to tamp down rate-cut expectations in July and October—only for the FOMC to settle on lowering rates anyway.

“Investors might be wary of getting head-faked for a third time, especially because we will be getting so much data before the January meeting,” he wrote.