Dot Plot: Higher For Longer Message, Softly Held

Looking at the Dot Plot, it conveys a more entrenched higher for longer message than the December edition:

• While the 2024 median Dot - the most closely watched individual item in the SEP - remains unchanged at 4.6% (3 cuts this year), there was an upward distribution from 4- and 6-cutters (now just 1 member sees more than 3 cuts this year, vs 5 previously), with a solid 9 at the median 4.6%, versus 6 prior. There is little evidence that the more hawkish end of the FOMC got any more hawkish since December.
• The surprises are further out: the 2025 and 2026 end-year medians have drifted up, showing 1 less cut in those respective years. Note also that the dovish dots have drifted up, with the most hawkish 3-4 dots not really changing.
• The higher 2025-26 profile may reflect a higher path converging with a higher longer-run dot: 2.6% (actually it looks like it is a split between 9 at 2.50% and below, and 9 at 2.625% and above, meaning a 2.5625% median rounding up to 2.6%). Effectively, two of the longer-run 2.375% dots moved higher from last time, boosting the median.
• Overall this paints a higher for longer message: fewer cuts in 2025 and 2026 are reflective of the stronger economy and higher inflation portrayed in the economic projections, and the 2024 and 2025 drifts may suggest a bias toward cutting later rather than earlier in the year than seen in the December Dots.
• However we would note that the 2025 and 2026 medians are fairly "soft" - just one participant moving down from either median level would shift the medians down (currently both medians have 10 at or above, 9 below).