An explainer as to why we chose the Human.......>

FED: An explainer as to why we chose the Human Readable Algo questions that we

did, particularly focused on the Dot Plot. For a start, the changes to the

Statement are unlikely to be significant beyond the usual mark-to-market.

- Consensus is that 2019-22 median dots will go down 25bps (to reflect the Oct

cut, which was not reflected by the Sep SEP), with rates going up starting in

2021. Assuming that's true, medians wd be: 1.625% 2019 and 2020, 1.875% in 2021.

- "How many 2020 dots are above / equal to / below 1.625?" tries to capture how

many members will be looking for a change in rates by end-2020. There are

expected to be a few in the hiking camp, but how many? Any cuts? And how many

hawks will be looking to reverse insurance cuts?

- "How many 2021 dots are above 1.875?" - Along the same vein, consensus is that

the 2021 median will shift to show 1.875%, i.e. 1 hike. Just 3/17 dots were

there already; 4 dots were below (at 1.625%); 6 were more than 25bps above

(2.375% and 2.625%). A median above than 1.875% might be seen hawkish.

- "Median/Mean Longer Run Proj. of Funds Rate?" Some on FOMC have said they now

see a lower neutral rate than previously. Current median: 2.50%, mean: 2.57%.