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FED: Dot Plot: 2024-27 Largely In Line, Higher Longer-Run Of Note

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The Dot Plot shows a lowered profile for the 2024-2026 Fed funds rate, which is more or less in line with what would have been expected in the event they cut 50bp today (as they did). The table below shows the new distribution vs June's projections, with medians in bold.

  • The 2024 split between 75bp (4.6% median, ie only one more 25bp cut this year beyond today) and 100bp cuts (4.4%) was quite fine: of 18 participants, 9 were 4.6% or above and 10 at 4.4% or below (just one sees 125bp of cuts, 2 see no further cuts, presumably including dissenter Bowman).
  • 2025 is also finely split, with 8 at 3.1% or below, and 10 at 3.4% or above. Expectations had been that this would be 3.1% or 3.4%, so not a real surprise either, though the distribution suggests a relatively conservative pace of easing is foreseen next year.
  • And 2026 and 2027 are in line at 2.9%, or basically around longer-run neutral.
  • The surprise here: the longer-run dot (not depicted below) rose from 2.75% to 2.875% (2 on that figure, 8 below it, and 8 above it). Only a couple of analysts saw it rising at this meeting. 
     
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The Dot Plot shows a lowered profile for the 2024-2026 Fed funds rate, which is more or less in line with what would have been expected in the event they cut 50bp today (as they did). The table below shows the new distribution vs June's projections, with medians in bold.

  • The 2024 split between 75bp (4.6% median, ie only one more 25bp cut this year beyond today) and 100bp cuts (4.4%) was quite fine: of 18 participants, 9 were 4.6% or above and 10 at 4.4% or below (just one sees 125bp of cuts, 2 see no further cuts, presumably including dissenter Bowman).
  • 2025 is also finely split, with 8 at 3.1% or below, and 10 at 3.4% or above. Expectations had been that this would be 3.1% or 3.4%, so not a real surprise either, though the distribution suggests a relatively conservative pace of easing is foreseen next year.
  • And 2026 and 2027 are in line at 2.9%, or basically around longer-run neutral.
  • The surprise here: the longer-run dot (not depicted below) rose from 2.75% to 2.875% (2 on that figure, 8 below it, and 8 above it). Only a couple of analysts saw it rising at this meeting.