Where will the Fed Funds rate be in 3 years.
The Fed’s latest Dot Plot shows that the Fed thinks in three years, which it considers the “longer run,” interest rates will be around 3.5%.
But Twitter is quite a bit more dovish.
David Schawel, a portfolio manager at Square 1 Asset Management — and a contributor to our Most Important Charts feature — collected responses from 135 users on Monday and found that the median forecast for the Fed Funds rate is just 1.75%.
Said another way, the market thinks interest rates will be about half what the Fed’s own projections indicate.
Here’s the chart from Schawel, which shows three distinct camps: doves who see the Fed Funds at around the same as today (0.25%), the “consensus view” that sees rates near 1.75%, and the hawks that see rates near 3%.
And for the sake of comparison, here’s the Fed’s latest dot plot.
And the Fed Funds rate over the last 40 years.
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