President Donald Trump said Tuesday that he’ll announce his pick for the next chair of the Federal Reserve early next year. Jerome Powell’s term runs until May, meaning he has several more FOMC meetings to lead, including one next week.

In the last meeting, there was dissent among the FOMC members about what they thought should happen with interest rates. For an inside perspective on why dissent within the FOMC matters, “Marketplace” host Kai Ryssdal spoke with Daniel Tarullo. He was on the Fed board for eight and a half years and is currently a professor at Harvard Law School.

Kai Ryssdal: The first thing I want to get into is next week’s meeting. And I’m not so interested in what’s going to happen, but how you think it’s going to happen. What’s the conversation in the room going to be like? And when Chair Powell starts taking questions, what do you think he’s going to be saying?

Daniel Tarullo: Well, I suspect, Kai, that — as with almost all FOMC meetings — the outcome will be pretty much determined before the meeting begins. We’re going to have dissents one way or another, I think that’s almost a foregone conclusion. So the interesting thing about the meeting will be how are the members of the FOMC signal the positions they’re going to take in January and beyond. And judging by the minutes of the October meeting, I think it’ll be a more robust discussion than most.

Ryssdal: For those who didn't read those minutes, the phrase, “members strongly disagreed,” which is kind of extraordinary, honestly, for Fed minutes. I'd love your thoughts on why you think this is all happening now, why dissent is becoming so much of a thing.

Tarullo: So I think there are two things going on, Kai. One, just the assessment of the data, and two, positioning for the anticipation of a Trump appointee as chair next year. With respect to the former, that is, how are we making decisions now? You've got both pressure on the inflation side and pressure on the employment side. The Fed is in a difficult situation, and it's got to choose between its two mandates. That's why I think you're seeing people fall on different sides of the line. It kind of goes to their predispositions.

With respect to the longer term, though, I think that's the more interesting story. The things that have been said by some of the Reserve Bank presidents, in particular, over the last few weeks strike me as not just about the December meeting or the January meeting. They strike me instead as drawing a line that these Reserve Bank presidents are suggesting they're not willing to cross on fulfilling the Fed's mandate on inflation. And I read that as a signal to whoever the incoming chair ends up being, Kevin Hassett or someone else, that they are not simply going to capitulate to an accommodative monetary policy if they feel, as they do, that the data suggests otherwise.

Ryssdal: Accommodative monetary policy, just for those unfamiliar, is lower interest rates, which then will stimulate the economy. Let me ask you, though, about the role of the chair. You and I have talked before about Chair Powell, and I think you have said to me in front of a microphone — so I'm not sharing any secrets — you have great admiration for way the chair has handled the vagaries of his job, shall we say, during the Trump presidencies. What, in your mind, is the Fed chair's job?

Tarullo: There are many things you could say. The two most important things are, first, to provide intellectual and analytic leadership to the FOMC, to do an assessment of the economy, to make a case for either staying with your monetary policy position or changing it. And secondly, to be someone who forges a consensus around monetary policy. Oftentimes, that consensus will connect to the analysis the chair has done, but sometimes, when there are different views on the committee, the adroit chair will be able to adjust policy somewhat or adjust the way in which the Fed is communicating its policy to maintain a consensus. And as you rightly said, Kai, I think Chair Powell has done a really first-rate job through what has been a difficult set of five or six years.

Ryssdal: Why does consensus matter so much with the Fed?

Tarullo: Well, you don't want to have a singular mindset, obviously. That is, you do want to have a lot of debate and a lot of disagreement, if there's disagreement on the merits. The reason I think consensus is important for the Federal Reserve is that it makes it easier to communicate with markets and the public as to what the direction of policy is. If we had a tradition like the Bank of England of having frequent and multiple dissents, I don't think it would matter as much. But if we get a lot of dissents now, given the history of the institution, then I think markets are going to be somewhat concerned.

Ryssdal: Every single time that I or any other reporter asks a regional bank president or a member of the Board of Governors, “let's talk about the politics of this moment,” they all to a person say politics doesn't matter inside that room. And it certainly seems to me now that with Stephen Miran on the board and with the attempted firing of Lisa Cook and the other things that President Trump has said, what used to be an exogenous thing, right, political pressure coming from the outside, is now actually in the room.

Tarullo: Yeah, I think that political pressure is hard to distinguish from just a different policy position. But you're quite right, Kai, that the policy preferences as articulated by the administration are now sitting around the FOMC table, obviously in the position of Governor Miran, since he continues to hold his chair as CEA, but I think more generally. And you know, to be fair, I think we've seen some shifts in the position of some of the other members of the FOMC, who used to be a little bit more dovish and now they're a little bit more hawkish.

Ryssdal: If somebody nominated you to be on the Fed right now, would you take the job?

Tarullo: Let me put it this way, Kai: I would not do it with the enthusiasm that I undertook the task when President-elect Obama asked me in the fall of 2008. I think the Fed is already changed some, and I fear that it is going to be changing more. I think there's been an erosion in the structure of the Fed, and there's been an erosion in the capacities of the Fed. And, you know, I'm not going to attribute this to any one president or any one administration. You know, the Fed has been more front and center for almost 20 years now. And thus, whether it likes it or not, it gets buffeted more by political winds than it used to do.

Ryssdal: Do you think there’s any going back?

Tarullo: With these things, it’s always easier to undo a strong position or position of neutrality, a position of capability, than it is to rebuild it. You know, I worry about that in lots of parts of the government. I don't think we're at a critical point yet with the Fed. And I think if the new chair makes clear to the staff and to the other members of the FOMC that he's interested, and it's going to be he, that he's interested in the integrity of the Fed and its people, then I think we can at least preserve where we are. But definitely the trend has not been in the right direction.

Ryssdal: The president said over the weekend that he has decided who the next person is going to be. Seems a little early, Chair Powell is not done till May. What do you make of that?

Tarullo: Well, you know, there was talk as early as the late summer that the president was going to name someone. I mean, usually the replacement is named a few months in advance, so we wouldn't be too much ahead of the norm, but I think inevitably, everybody's going to just start asking the chair designate what he thinks, and that's not great for the Fed.