Will The FOMC Revise The Dot Plot Post-CPI?

The softer-than-expected November CPI print yesterday could impact the market's interpretation of the FOMC's December Dot Plot, even if it doesn't change the Dot Plot itself via a downgrade to terminal rate expectations.

• We don't think the Dot Plot will have changed vs pre-CPI. We think that will be the market's understanding as well, though the rate forecasts (particularly if hawkish) may be taken with a grain of salt upon release.
• Consensus expectations for the 2023 median were divided fairly evenly between 4.9% (another 50bp of hikes after today) and 5.1% (75bp).
• FOMC forecasts were submitted by the end of last week but can be altered up to the night before the rate announcement. It's unknown whether any participants will change their submissions, and we probably won't know until Powell clarifies in the press conference.
• Looking at a recent precedent: the infamous June 75bp (not 50bp) pre-announced via the WSJ in blackout involved a CPI reading out on the Friday before the meeting, technically before the initial SEP submissions were due.
• Powell clarified that the published SEP that meeting was "of one piece" that reflected the 75bp hike and participants' "thinking about this [75bp] rate increase and what's going forward" for the economic forecasts.
• It's likely that 75bp was agreed via consensus on the prior Friday ahead of the submissions. But Powell didn't really address whether the SEP was revised.
• Either way, at June's FOMC, they had more time to consider a revision before the meeting began, and a more compelling reason to make changes given they were also unexpectedly upsizing the hike size.
• There is less compelling reason to change this time, and a revelation that they changed forecasts based on one data point would run counter to the Fed's previous messaging.