Here Is The New Fed Dot Plot

Here’s the new Fed dot plot.

On Wednesday, the Federal Reserve announced its latest monetary policy decision at 2:00.

Additionally, the Fed released latest Summary of Economic Projections, which included GDP and inflation projections from FOMC members, as well as the famous dot plot.

The dot plot is a chart that shows where FOMC members think the Fed’s benchmark interest rate will be at the end of upcoming years and over the long term.

Following the latest dots, Peter Tchir at Brean Capital said in an email:

“Dots – 1.27% average for end of next year (up from 1.2% in June). More hawkish. Also hard to get to 1.25% starting in June… 2016 2.68% up from 2.53% – much higher… 2017 is “new” and is 3.54%… Longer run is 3.79% up from 3.78% – terminal rate settling in. This should cause bear flattening near term, but then long bond and ultimately 10 year should be bought. Equities should be ok with this and the language, though the press conference seems to have more downside risk, then we have to think about Scotland and Alibaba — probably more bond and equity weakness… From our work, the middle of the Fed is relatively happy to go along with the most vocal crew – and that is increasingly becoming the hawks. Will take time to sink in, but in spite of leaving the language, the hawkish sentiment is slowly winning, and most importantly, not yet priced in.”

The dots aren’t used a policy tool but do give insight into what FOMC members think about the future of interest rates, and is the best insight we have into the long-term thinking of the Fed’s members.

Recently, economists at the San Francisco Fed highlighted the discrepancy between where the Fed sees rates in the future, and what the market currently expects.

Here’s are the dots from June.

In addition to new dots, the Fed also released new GDP and inflation projections.

This table from the Fed shows the Fed’s updated expectations compared to the prior period, with GDP projections for each of the next three years lowered somewhat.

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