The overwhelming market consensus is that the Fed will lower interest rates by 25 basis points Wednesday, but Fed watchers are also looking for clues about whether there is an appetite among certain committee members for larger cuts and how aggressive they will be in obtaining them.

During the July FOMC meeting, Fed Govs. Christopher Waller and Michelle Bowman dissented from the majority decision to keep interest rates steady, urging a 25 basis point cut instead. With the addition of Stephen Miran to the Fed board, Bowman and Waller are likely to have another advocate for lower rates, but it remains unclear whether there are enough members on the committee of a similar mind to support larger cuts at the September meeting or going forward. 

The dynamics on the Fed board are such that Powell will have to mediate a position between those seeking a more aggressive rate cut and those who would prefer to keep interest rates steady out of an abundance of caution toward rising inflation. 

"I would expect a relatively hawkish cut" in September, said Vincent Reinhart, chief economist of investments at BNY, during a media availability last week. "I think that's how Chair Powell gets his committee to the table. Because, as we know from the last minutes, there are some participants who are restive at the idea of cutting rates, wanting more evidence on inflation. There are some who think they should have cut rates — we've already witnessed the dissent."

Reinhart added that whatever the committee does during today's meeting will be unlikely to impact the trajectory of the committee going forward as the Fed board's composition changes. Notwithstanding the outcome of Cook's legal challenge to remain on the board, Miran's term expires in January — at which time he or another nominee of Trump's choosing would be put forward — and Powell's term as Fed chair expires in May 2026. Traditionally, Fed chairs resign from their membership positions on the Board after their terms as chair expire, but they are not required to resign. Powell demurred when asked if he would remain to serve out his term, which expires in 2028, but did not categorically state that he would resign.

That expectation that the Fed is on a trajectory to looser monetary policy — particularly when the White House is taking unprecedented steps to effectuate lower interest rates — could influence the FOMC, but Reinhart said how those coming changes influence the committee now is anyone's guess.

"There will be changes in [the FOMC's] composition, and administrations appoint people more inclined to their view, and the administration wants to lower rates," Reinhart said. "And so as the chair and governorships roll over, we will get more accommodative policy in 2026 and beyond. An interesting question is, will that influence what the committee does now? I don't know."