Since everyone is focused on the dot plot, here it is, and while Kocherlakota is gone, he has been replaced with a new Kocherla-Dota as someone is dragging on the new low 2017 and 2018 dots: it appears a new Fed uberdove has emerged…
What the dots reveal:
- Longer run Fed funds median at 3.0% compares to previous forecast of 3.3%
- 2016 median Fed funds 0.9% vs 0.9%
- 2017 median Fed funds 1.6% vs 1.9%
- 2018 median Fed funds 2.4% vs 3.0%
Here is the comparison between the June and March Dots:
And the straightline comparison:
Of note: while the median forecast of 17 policy makers remained at two quarter-point hikes this year, the number of officials who see just one increase rose to six from one in the previous forecasting round in March, according to the latest Fed projections. Expect the “two” to drop to “one” when the Fed finds more data that does not allow it to hike over the next 6 months.
Also of note: in the otherwise boring projections, someone also has capitulated on the long-term unemployment rate:
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