On November 17, 2025, the world’s two most influential central banks found themselves at pivotal crossroads, each grappling with internal divisions and questions about representation. As the Federal Reserve’s consensus fractured over the future of U.S. interest rates and the European Central Bank (ECB) began a sweeping leadership overhaul, the very nature of central banking—how decisions are made, and by whom—came under renewed scrutiny.
According to Yahoo Finance, the Federal Reserve’s once-unified front has unraveled. In late October, the Fed’s decision to cut interest rates by a quarter point was marked by an unusual split: one policymaker wanted to hold rates steady, while another pushed for a deeper cut. This rare dual dissent hadn’t been seen since 2019, and earlier in 2025, more than one Fed governor cast a dissenting vote for the first time in over thirty years. The division, now visible in public speeches and statements, has put Chair Jerome Powell in the hot seat, tasked with maintaining consensus among the seven-person Board of Governors and twelve regional bank presidents—a tradition dating back to Ben Bernanke’s tenure.
The reason for this discord? Uncertainty about the U.S. economy’s direction and the impact of President Donald Trump’s aggressive trade policies. Some Fed officials argue that tariffs could stoke inflation, insisting the central bank should keep a sharp focus on controlling rising prices. Others, however, point to signs of a weakening labor market and believe the Fed should prioritize job stability over inflation fears. This split is more than academic; it could affect the very credibility and effectiveness of the world’s most powerful central bank.
"If these intellectual disagreements aren't able to be reconciled, then that could affect the Fed's effectiveness and credibility," said Derek Tang, an economist at LHMeyer, to Yahoo Finance. He even warned, “In the next decade or so, the Fed could become like the Supreme Court, with people voting along party lines.”
For Powell, the challenge is daunting—and possibly beyond his control. As Jon Hilsenrath, a senior adviser at StoneX Group, explained to Yahoo Finance, consensus-building has been a hallmark of Fed leadership for decades. Powell “built on what Bernanke and (former Fed Chair Janet) Yellen did,” Hilsenrath noted. But the current breakdown “is beyond Jay Powell or his leadership.”
Across the Atlantic, the ECB faces a different, but equally consequential, turning point. As reported by Reuters, euro zone officials have embarked on a two-year process to replace four of the ECB’s six executive board members, including President Christine Lagarde. This reshuffle, set against the backdrop of the ECB’s 26-member Governing Council—where 24 are men, and all 20 national central bank governors are men—has reignited debate over diversity and representation in central banking.
Since its founding in 1998, women have held just 19% of ECB board seats. Christine Lagarde, a former French economy minister, broke new ground as the first woman to lead the ECB. Still, critics argue the institution’s poor record on geographic, gender, and ethnic diversity leaves it with blind spots, especially in understanding the lived realities of the euro zone’s 350 million people.
"When it comes to female representation, the ECB’s track record is appalling," said Maria Demertzis, Europe strategy leader at The Conference Board, to Reuters. “Diversity matters. You cannot have good decisions if people making them represent just a very specific, narrow segment of society, when your objective is to serve society.”
The first position up for grabs is that of Vice President Luis de Guindos, whose term expires early in 2026. Smaller nations such as Croatia, Finland, Greece, Latvia, and Portugal are all vying for the slot. But, as ING economist Carsten Brzeski told Reuters, the vice presidency is “not that influential” compared to the chief economist, head of market operations, and president—roles all set to change hands in 2027. “If I was sitting in Berlin or Paris, I'd say, it's fine, let them have it, so we can concentrate on the more important positions,” Brzeski quipped.
Other central banks have made greater strides on diversity. The Bank of England’s nine-member Monetary Policy Committee now boasts a female majority, thanks to years of political and public pressure. In Sweden, the central bank board is evenly split between men and women, while Norway’s board has a slight male majority but is led by a female governor. The U.S. Federal Reserve’s rate-setting committee has also become more diverse, though recent moves by President Trump—such as efforts to fire Lisa Cook, the first Black woman on the body—have drawn criticism for reversing progress.
But as Reuters points out, the pipeline for women in finance remains thin. A Dallas Fed working paper found that the share of women among economists in the Federal Reserve system inched up to just 22% from 20% over two decades. The ECB faces similar challenges: Lagarde has set ambitious targets for hiring more women staff, but she has little say over who gets appointed to the board. Appointments are nominated by finance ministers of the euro zone’s 20 nations, then confirmed by EU leaders and the European Parliament. While Parliament can delay appointments over gender objections, it cannot block them outright.
“The fact that there are four roles to be replaced is actually an advantage as it allows for an overall package to be made,” Markus Ferber, a member of the European Parliament’s Committee on Economic and Monetary Affairs, told Reuters. “It is always easier to tick all the boxes if you have a package of candidates. I will advocate in the European Parliament that we do not look at each candidate separately, but look at the bigger picture.”
There’s also evidence that greater gender diversity could strengthen central banks’ credibility. A 2020 study by researchers at Bocconi University and Trinity College found that women at central banks tend to be more hawkish in fighting inflation. “With Lagarde at the top, the ECB has the right conditions to make a change, but they are stuck,” Demertzis observed. “They just don’t have the pipeline of women coming in to make their way to the top.”
As the Fed and ECB navigate these turbulent waters—one struggling to maintain unity, the other seeking to broaden its perspective—questions about who gets a seat at the table are more urgent than ever. The answers will shape not only interest rate policy, but also the ability of central banks to serve economies in all their diversity and complexity.
