The chart below shows that the last time there were three governors dissenting at an FOMC meeting was in 1988.
On the one hand, dissents can enhance the Fed’s credibility by promoting transparency.
On the other hand, frequent or widespread dissents can be perceived as a sign of internal division or weak leadership.
Academic papers find that dissents have a negative impact on stock prices, and that the lack of clarity in FOMC decisions can lead to increased financial market volatility as investors must price in a broader range of potential policy outcomes. Papers also find that disagreement among FOMC members puts upward pressure on inflation expectations.
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