Wall Street needs to tone down its reliance on the Fed dot plot
The post Wall Street needs to tone down its reliance on the Fed dot plot appeared on BitcoinEthereumNews.com. Wall Street is stuck on the dot plot again, and it’s turning into a joke. Ahead of the Federal Reserve’s meeting this Wednesday, traders, economists, and anyone who watches the Fed for a living are all stuck on one question: Will the median forecast from 19 Fed officials show one interest rate cut in 2025, or two? That’s it. That’s the big mystery. The rates aren’t even expected to change this week—but the market still treats this dot chart like it’s some kind of divine prophecy. According to Bloomberg, this obsession has gotten ridiculous. The projections are built on economic forecasts full of holes and uncertainty, but the entire market keeps treating them like hard science. That’s part of the reason some Fed officials are openly talking about changing the system. Right now, the dot plot gets updated every other meeting. Each dot represents what one policymaker thinks the interest rate should be by the end of the year. Then Wall Street treats the average—or more specifically, the median—as if it’s the Fed’s secret game plan. Fed’s internal chaos leaks into public confusion The June 2024 meeting proved how misleading this thing can be. In March, the median projection showed three cuts. Then in June, that dropped to just one. But when September came around, the Fed slashed rates by a full percentage point—way beyond what the plot had hinted at. The dot plot didn’t prepare the market for that. It misled it. Things got tighter this past March. Four officials said zero cuts. Four said one. Nine guessed two. Two predicted three. That cluster averaged out to a median of two cuts. But if only two of those officials decide this week to bump their projection down to one cut, the entire median shifts. Suddenly, the market thinks the…
The post Wall Street needs to tone down its reliance on the Fed dot plot appeared on BitcoinEthereumNews.com.
Wall Street is stuck on the dot plot again, and it’s turning into a joke. Ahead of the Federal Reserve’s meeting this Wednesday, traders, economists, and anyone who watches the Fed for a living are all stuck on one question: Will the median forecast from 19 Fed officials show one interest rate cut in 2025, or two? That’s it. That’s the big mystery. The rates aren’t even expected to change this week—but the market still treats this dot chart like it’s some kind of divine prophecy. According to Bloomberg, this obsession has gotten ridiculous. The projections are built on economic forecasts full of holes and uncertainty, but the entire market keeps treating them like hard science. That’s part of the reason some Fed officials are openly talking about changing the system. Right now, the dot plot gets updated every other meeting. Each dot represents what one policymaker thinks the interest rate should be by the end of the year. Then Wall Street treats the average—or more specifically, the median—as if it’s the Fed’s secret game plan. Fed’s internal chaos leaks into public confusion The June 2024 meeting proved how misleading this thing can be. In March, the median projection showed three cuts. Then in June, that dropped to just one. But when September came around, the Fed slashed rates by a full percentage point—way beyond what the plot had hinted at. The dot plot didn’t prepare the market for that. It misled it. Things got tighter this past March. Four officials said zero cuts. Four said one. Nine guessed two. Two predicted three. That cluster averaged out to a median of two cuts. But if only two of those officials decide this week to bump their projection down to one cut, the entire median shifts. Suddenly, the market thinks the…
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