The Chair leads the pack

Lagging data supports an aggregate Fed tone that is the most dovish since January. Notably, this shift is not being driven by Warsh, who has maintained a hawkish stance even as broader perceptions of Fed communication have turned more dovish. History suggests that when a large gap emerges between the Chair and the rest of the Committee, policymakers often shift toward the Chair's position. During past episodes of extreme hawkish divergence, aggregate Fed tone became more hawkish on average, narrowing the gap. While past patterns may not repeat, the current divergence, which ranks in the top 1% since 2015, appears difficult to sustain. Ultimately, this points to a lack of policy cohesion that Warsh may seek to address at Jackson Hole.