The Fed is so divided that the next vote on rates could result in an unprecedented tie, analysts say

After two earlier cuts, recent comments from policymakers have been leaning hawkish as inflation remains stuck above the Fed’s target, dampening hopes for more easing at the Federal Open Market Committee’s Dec. 9-10 meeting.

But New York Fed President John Williams surprised Wall Street on Friday when he said he sees “room for a further adjustment in the near term” to bring benchmark rates closer to neutral.

That boosted odds for rate cut next month above 70% from less than 40% the day before, while also sparking a broad stock market rally. But it also potentially sets up some tricky math on the 12-member FOMC.

In a note on Friday, economists at Capital Economics attempted to count votes. The four regional Fed bank presidents on the committee—Susan Collins, Austan Goolsbee, Alberto Musalem and Jeffrey Schmid—have sounded skeptical or “downright hostile” to the idea of a rate cut next month. Fed governors Michael Barr and Phillip Jefferson have also signaled caution.

On the dovish side, the three Trump-appointed Fed governors—Michelle Bowman, Stephen Miran and Christopher Waller—have been calling for rate cuts, and Williams sounded Friday like he could join them.

“That’s still only four ayes in favor of a cut and six nays against but, to the extent that Williams and Fed Chair Jerome Powell often hold the same view (and Governor Lisa Cook usually votes with Powell), we could have a six-six tie,” Capital Economics said.

“Then things would get really messy since it’s not clear that Powell has a casting vote, so the vote to change policy might simply fail to be carried.”

The Labor Department’s September jobs report released on Thursday after being delayed by the government shutdown is unlikely to tip the scales.

That’s because the mixed data showed payrolls grew by more than expected, but prior months were revised lower with August now showing a decline. The unemployment rate also ticked up to 4.4%, the highest since 2021, from 4.3%.

Separate data on weekly jobless claims still don’t indicate a spike in newly unemployed people, but the steady rise of continuing claims means jobs are difficult to find.

What if there’s a tie vote on the Fed?

There has never been a tie vote at the Fed, and the FOMC’s rules and procedures don’t discuss such a scenario.

Robert Eisenbeis, who previously served as director of research at the Atlanta Fed, told Fortune earlier this year that in the event of a tie vote, the federal funds rate would stay the same.

There is no override provision, meaning the chair doesn’t have the ability to force a different decision, he explained via email. It’s also not clear if policymakers would take another vote during that same meeting or wait until the next scheduled meeting to vote.

“There is no precedent here,” Eisenbeis said in August. “I would presume there would be the option for a revote, but if not, then no change in the funds rate. If there is no change in the rate, then the next meeting is where another review and vote would take place.”

While the Fed has never had to deal with a tie vote, it has come close a few times. According to a July note 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.

Hodge, who previously served as principal economist at the New York Fed, previously told Fortune via email that the question of a tie hasn’t been covered in any official public documents explicitly.

Still, the chair has significant authority in guiding meetings and decisions, he said, noting that the FOMC is also a self-governing committee that has the ability to alter its rules.

“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 in August. “This is not made explicit in any document I have seen and is more of a custom than a rule.”

If there’s a tie at the Fed, investors might look to the U.K. for guidance. The Bank of England had to navigate a historic deadlock this summer after four policymakers voted to keep rates steady, four voted to cut by a quarter point, and one voted to cut by a half point.

That prompted the bank’s Monetary Policy Committee to hold a decisive revote for the first time since it was created in 1997. The subsequent 5-4 decision lowered rates a quarter point to 4% from 4.25%.