ORLANDO, Florida, Nov 4 (Reuters) - Disagreement and

dissent among the Federal Reserve's 19-strong monetary

policymaking committee is deepening as the fog of economic

uncertainty thickens, putting Chair Jerome Powell's

consensus-building skills to the ultimate test.

The Fed's decision last week to cut interest rates was

unexceptional, but the meeting was historic. The 10-2 vote to

cut rates by a quarter of a percentage point was only the third

time since 1990 that voting Fed members dissented in favor of

both tighter and looser monetary policy. Trump-appointed

governor Stephen Miran voted to cut by 50 basis points, while

Kansas City Fed President Jeffrey Schmid voted for no change.

These fissures were underscored by Powell in his

post-meeting press conference. He told reporters that officials

hold "strongly differing views about how to proceed", meaning

easing in December is not the "foregone conclusion" markets had

been pricing in. Indeed, December's decision may boil down to a

coin-flip between another 25-basis-point rate cut or no change.

This all comes at a challenging moment. Not only are

investors navigating an economic data drought caused by the U.S.

government shutdown - set to become the longest on record - but

the indicators that are available show both a weakening labor

market and sticky inflation. Meanwhile, the Fed is being heavily

politicized, with the Trump administration attacking the central

bank's independence as it also prepares to nominate Powell's

successor next year.

It's a perfect storm that markets don't need, especially ones

priced for perfection.

HAWKS VS DOVES

There is always going to be a wide range of views on a 19-member

committee, with 12 voting members at any one time, including a

mix of Fed governors and presidents of the 11 regional Fed

banks.

Broadly speaking, the current division between the "doves"

and the "hawks" appears loosely to have governors on one side

and regional bank presidents on the other. Both sides contain

centrists, but the governors are leaning in favor of easier

policy, with the regional Fed presidents more apt to be cautious

about further rate cuts.

Since the Fed's meeting last Wednesday, concerns about

cutting rates have been voiced by Dallas Fed President Lorie

Logan, Kansas City Fed President Jeffrey Schmid, Cleveland Fed

President Beth Hammack and Chicago Fed President Austan

Goolsbee.

Meanwhile, Governors Miran, Christopher Waller, and Michelle

Bowman have publicly supported the decision to cut last week and

backed further easing. Waller and Bowman are on Treasury

Secretary Scott Bessent's short list to replace Powell, whose

term as Chair ends in May.

'ROWDY AND DISORDERLY'

Powell's leadership and ability to pull together a consensus

in this climate will be severely tested, as recent policy

meetings attest. Governors Waller and Bowman dissented in favor

of a rate cut in July, and then there was the historic two-way

dissent last month.

It's true that non-voting regional Fed presidents are

flexing their muscles, but it remains to be seen how effective

that will ultimately be. As Tim Duy, chief U.S. economist at SGH

Macro Advisors, points out, "the power flows from the Board".

"It's more difficult for Powell to create a consensus in

this space," Duy says, adding that Powell has done a "great job"

in doing just that over the years of his chairmanship.

If this policy polarization intensifies, many investors

operating today will be in unfamiliar territory, having grown

accustomed to well-telegraphed, consensus-driven Fed policy.

James Egelhof, chief U.S. economist at BNP Paribas, argues

that the "very high level of consensus" investors are used to

might prove "elusive" in the months ahead.

Egelhof still expects the Fed to deliver further rate cuts,

including in December, but he also thinks we could see a "rowdy

and disorderly" process leading to a "bumpier and more

unpredictable" path than investors typically face.

"Polarization leads to uncertainty," he says.

Of course, greater policy uncertainty tends to fuel market

volatility and increased risk aversion, which, in theory, should

be reflected in rising risk premiums or widening spreads. That

hasn't happened yet.

But if the emerging splits on the FOMC continue to widen, we

could see just that. Don't say you weren't warned.

(The opinions expressed here are those of the author, a

columnist for Reuters)

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