By Nick Timiraos

Uncertainty fueled by the war in Iran is expected to reinforce a broad agreement among most Federal Reserve officials to sit tight at their meeting this week. That will make any dissenting votes all the more notable as Jerome Powell nears the close of his tenure as Fed chair.

Divisions at the Fed have been building. What until recently had been a culture of near-unanimous votes has given way to more dissent, particularly from the governors President Trump has placed on the board. Over the past year, his three appointees have broken from the majority, including two at the Fed's last meeting. This week, all three are candidates to dissent in favor of a cut.

Even if they don't, that such a split has become plausible, meeting after meeting, marks a shift that threatens to outlast any single vote. The significance isn't the vote margin -- it's that all three are appointees of a president who is publicly demanding lower rates. Three governors haven't dissented at a policy meeting since 1988.

Dissents from governors land differently than those from the Fed's other policymakers, and the reason is structural. The Fed sets interest rates through a 12-member committee that draws from two different pools: seven governors, who are appointed by the president and work at the Fed's Washington headquarters, and a rotating cast of five of the system's 12 regional bank presidents. Those presidents aren't political appointees; they're chosen by local boards of business and nonprofit leaders. All 19 participate in the policy discussion, but only 12 vote.

Dissents from bank presidents occur from time to time. Until recently, governor dissents carried more weight because they were so rare.

Stephen Miran has dissented in favor of easier policy at every meeting since joining the board last September. Before that, he served as a top economic adviser to Trump.

Christopher Waller, who also dissented at the most recent gathering in January, is seen as a candidate to dissent again after February's unexpected drop in payrolls reinforced his argument that a weak labor market is near a tipping point.

Michelle Bowman cited the labor-market report as evidence the economy "could use some support from our policy rate" in a television interview two weeks ago. In December, she penciled in three cuts for 2026, more than most of her colleagues. Trump last year named Bowman as the Fed's vice chair for bank supervision.

Trump has repeatedly bashed Powell, whom he named chair eight years ago, for not cutting rates more aggressively and demanded last week that the central bank lower rates immediately, ahead of its scheduled meeting.

The standard advice for a central bank facing an oil shock is to look past it, concluding that the hit to growth and the boost to inflation roughly cancel out. But that advice assumes the price bump will be short-lived and that people still believe the Fed will get inflation back to normal.

Some former Fed officials questioned whether the economic case supports a rate cut this week. The Fed's preferred inflation measure was already running above 3% before the war in Iran sent oil prices sharply higher, adding a new source of price pressure on top of tariffs that may not have fully passed through.

"To dissent when your base measure of inflation is above 3% and has been trending in the wrong direction would signal that you're OK with inflation," said Jim Bullard, who dissented several times as president of the St. Louis Fed and is now dean of the business school at Purdue University. "I think it's a tough case to make."

When the Fed cut rates in December, three officials dissented, but in opposite directions. Two bank presidents opposed cutting rates while Miran favored a larger reduction.

Bowman broke the seal on governor dissents in 2024, becoming the first to oppose a policy decision in 19 years when she voted for a smaller rate cut than her colleagues. Last summer, she and Waller dissented in favor of easier policy, the first time two governors voted against the chair since 1993.

Several former policymakers applauded the development toward more open disagreement at an institution that encourages consensus. But some have worried about a difference between governors occasionally breaking ranks on the merits and a pattern where all of one president's appointees vote as a bloc, meeting after meeting, in the direction the president urges.

"It's hard to ascribe the motives to individuals, but if the market interprets that they're reacting in a political way... I think that is very dangerous grounds," said former Boston Fed President Eric Rosengren, who was one of three dissenters at a 2016 policy meeting.

In countries where central banks have been undermined by political pressure, he said, the public eventually lost confidence that officials would take unpopular steps to keep inflation in check. That loss of confidence itself made inflation harder to control.

A related risk is that what begins as healthy dissent gives way to the type of partisan divide that has reshaped the Supreme Court, where individuals reason that they're following their own analysis but the public only sees party alignment. That would be a notable shift at the Fed, where the trade-offs between stable prices and a healthy job market haven't historically broken down along party lines.

For some central banks, such as the Bank of England, evenly divided votes on policy decisions are routine. The Fed has avoided that -- not because officials always agreed, but because a broad consensus meant markets and the public could focus on the economic outlook rather than trying to predict which faction would prevail from one meeting to the next.

Waller himself has acknowledged the risks that finely split votes sow confusion. "If it gets really down to 7-5 votes, then one person switches at the next meeting, and the whole trajectory changes," he said last year.

Dissents sometimes amount to a challenge to the chair's leadership. That's less likely here, with Powell's term ending in May and Kevin Warsh, Trump's chosen successor, awaiting Senate confirmation.

Instead, both sides of the committee could use Powell's waning tenure to draw lines ahead of the transition, underscoring the consensus-building challenge Warsh would inherit.

Hawkish officials, for example, could use this week's quarterly projections to signal how they would resist rate cuts with an inflation rate stuck well above the Fed's 2% target.

"There's going to be more concern about influencing how a new chair may be thinking about the dynamics of the committee," said Rosengren.

Any dissents could also remind the regional bank presidents that the political dynamics around monetary policy have fundamentally changed, said Vincent Reinhart, a former senior Fed adviser who is now chief economist at BNY Investments.

"They should have appreciated that there is this force, and it will grow over time" if Trump gets more seats to fill at the Fed, said Reinhart. "It should be a reminder that your Fed forecast from here on is more about the political economy than the macroeconomy."