There has never been a tie vote on the rate-setting Federal open Market Committee, but the Federal Reserve has also never been under attack like it is indeed now.

That’s after President Donald Trump took the unprecedented step Monday to fire Fed Governor Lisa Cook, who has sued to block the move. A judge heard arguments in the case on Friday but didn’t issue a ruling.

Meanwhile, the composition of the Fed is changing, tilting the central bank more dovish. Trump has named Stephen Miran to fill a vacancy on the board left by Adriana Kugler, who left before her term was due to expire in January.

Miran would join Trump-appointed governors Christopher Waller and Michelle Bowman, who cast dissenting votes at the last Fed meeting as they sought to lower rates. And Jerome Powell’s term as Fed chairman expires in May, though it’s uncertain if he plans to remain on the board of governors until his term in that seat expires in 2028.

If Trump is able to replace Cook, that would shift the balance even more toward easing-and potentially clear the way for a reshuffle of the Fed’s regional bank presidents, who take turns serving on the FOMC. But even if the fed cuts rates in September like Trump wants, it’s unlikely to quiet the president as he has said rates should be more than 300 basis points lower than they are now.

It sets up a possible new era of more contentious meetings at the Fed, which typically has been driven by consensus with even one dissenting vote being rare.Votes may be closer. And given that the FOMC has an even number of 12 members,that raises the question of what would happen in a tie vote.

It’s not a far-fetched possibility.According to a note last month from Christopher Hodge, chief U.S. economist at Natixis CIB Americas,there have been three occasions when a decision on the FOMC passed by a one-vote majority,though the last time it occurred was in 1973.

The Federal Reserve’s rules and procedures don’t explicitly address what happens in the event of a tie vote. However, Hodge notes that the chair of the FOMC-currently Jerome Powell-would have the tie-breaking vote.

Potential for Tie Vote Looms Over Federal Reserve Rate Decisions

The Federal Reserve is facing increasing uncertainty as it approaches its next meeting on September 16-17, with the possibility of a tied vote on interest rate policy becoming more likely. This scenario, while unprecedented in recent history, raises questions about how the Federal Open Market Committee (FOMC) would proceed, particularly given ongoing personnel changes and differing economic viewpoints.

Uncharted Territory: What Happens in a Tie?

“There is no precedent here,” said former Fed vice chairman Stuart Eisenbeis. He suggests a revote would be the likely first step, but if that also results in a tie, the funds rate would remain unchanged, with the issue revisited at the next meeting. However, the exact procedures for resolving a tie haven’t been formally documented.

Former New York Fed principal economist Lou Hodge told Fortune that no official public documents explicitly address a tie vote. Despite this lack of formal guidance, the chair generally has the authority to guide discussions and potentially cast a deciding vote, mirroring practices in other deliberative bodies.

“In the absence of an explicit tie-breaking rule, the chair is generally understood to have the ability to cast a deciding vote or guide the committee toward resolution, as is common in other deliberative bodies with a presiding officer,” Hodge explained. “This is not made explicit in any document I have seen and is more of a custom than a rule.”

Eisenbeis also noted that former Fed Chairman Alan Greenspan reportedly always voted last to avoid the possibility of a tie.

Economic Crosscurrents and Increased Division

The potential for split votes is amplified by current economic conditions. Inflation remains above the Fed’s 2% target, influenced by previous tariffs, while the labor market is showing signs of cooling. However, there’s disagreement on Wall Street regarding whether the labor market slowdown is due to a lack of demand or a reduction in the labor supply due to immigration policies.

A recent example of a divided central bank occurred at the Bank of England earlier this month, where policymakers deadlocked with a 4-4-1 vote on interest rates. This prompted a revote, ultimately resulting in a 5-4 decision to lower rates by a quarter point to 4% from 4.25%.

Personnel Uncertainty Adds to the Complexity

The FOMC’s upcoming meeting is further complicated by uncertainty surrounding personnel. the confirmation status of nominees, including Cook and Miran, remains in question. Even if Cook wins her court case, her immediate return to duties isn’t guaranteed while appeals continue.

Divergent Views on Rate Cuts

While Chairman Powell has signaled openness to a rate cut next month, other policymakers hold more cautious, or “hawkish,” views. Furthermore, continued weakness in the labor market could push more members towards supporting lower rates, or a “dovish” stance.

Federal reserve Governor Christopher Waller stated in a speech on Thursday that he wouldn’t support a rate cut exceeding a quarter of a percentage point next month,but acknowledged this could change depending on upcoming jobs data.

“While there are signs of a weakening labor market, I worry that conditions could deteriorate further and quite rapidly, and I think it is indeed critically important that the FOMC not wait until such a deterioration is under way and risk falling behind the curve in setting appropriate monetary policy,” Waller said.

Key Takeaways

• The FOMC faces the possibility of a tied vote on interest rates at its next meeting.
• There is no established procedure for resolving a tie vote,leaving the decision largely to the chair’s discretion.
• Economic uncertainty and differing viewpoints among policymakers contribute to the potential for division.
• Personnel changes and confirmation delays add further complexity to the situation.

The September FOMC meeting promises to be a closely watched event, as the committee navigates these challenges and attempts to chart a course for monetary policy in a complex and evolving economic landscape.