Wall Street will have plenty to analyze during today’s Fed policy decision and Chairman Jerome Powell’s subsequent press conference. But one thing investors won’t see is what’s called a dot map projection.
The dot plot, or “summary of economic forecasts” in Fed speeches, is a special treat for analysts because it shows Fed policymakers’ expectations for the future federal funds rate, as well as forecasts for the full year and beyond.
The Federal Open Market Committee, the Fed’s policy-making group, meets eight times a year but only publishes dot plots once a quarter. Why? This is how it’s done. We get a dot plot for March, June, September and December.
As a result, markets are more likely to carefully dissect Chairman Powell’s speech word for word as economists and investors look for clues about when the Fed may begin tapering its aggressive rate hikes. Markets are already preoccupied with the Fed’s actions next month, with a fourth straight rate hike of 0.75 percentage points (also known as 75 basis points) expected at its November meeting.
“This week’s Fed rate hike of 75 basis points is practically a foregone conclusion,” wrote Luke Bartholomew, senior economist at investment firm abrdn. “The bigger question is how the Fed signals its future policy. path.”
But don’t expect any major announcements from Powell. He’s been in the game for a while and is unlikely to corner himself as he did in 2021 when he repeatedly declared that inflation would be “transient.” Under normal circumstances, the Fed chair is measured and determined — you can expect him to be particularly close to his cards today, as financial markets depend on his every word.