We can sum up the Fed regime change with a popular quip: The Fed has shifted from lender of last resort to the lender of only resort!

In our articles QE Is Coming and its follow-up, How The Fed Deals Liquidity, we discuss why the Fed has become the primary provider of liquidity since 2008 and the tools it uses to maintain ample liquidity in the markets. While that Fed regime change has been incredibly impactful on the financial markets, there is a growing possibility of another meaningful regime change that could prove equally impactful.

This article, like the two linked above, is dry. Still, investors today must understand that monetary policy has become a primary driver of liquidity, which in turn significantly influences asset prices. Without a clear understanding of what the Fed is doing and how it functions, your investment ideas, no matter how solid, can be flawed.

Groupthink Has Been The Fed Norm

The Fed's monetary policy-setting group, the Federal Open Market Committee (FOMC), meets every six weeks to discuss the economy, financial markets, liquidity, and a host of other factors that help the Fed set monetary policy to meet its inflation and employment objectives.

After two days of data analysis, conversation, and debate, the FOMC's voting members vote on whether to adjust monetary policy. Most often, the policy changes involve the Fed Funds Rate and or the monthly pace of QE or QT.

The committee is comprised as follows:

Seven members of the Board of Governors- including the Chairman

Four rotating regional Fed Presidents

The President of the New York Fed

While there are debates and many divergent views expressed at the FOMC meetings, the published results always give the impression of agreement. This is evident in the meeting statement, which lists the members who voted for the monetary policy actions and those who dissented. The example below from the October 29, 2025, meeting shows that two of the twelve members dissented or voted against the prescribed policy actions.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Alberto G. Musalem; and Christopher J. Waller. Voting against this action were Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting, and Jeffrey R. Schmid, who preferred no change to the target range for the federal funds rate at this meeting.