Fed: Tailwinds for dots – Nordea Markets

Analysts at Nordea Markets suggest that the Fed’s dot plot did show tailwinds for dots, but not enough to lift the median for 2018 to four rate hikes as they had expected.

Key Quotes

“FOMC members expect four rate hikes to be appropriate and 5 FOMC members expect three rate hikes, but the median remains at the latter because 2 FOMC members expect only one rate hike, while only 1 FOMC member expects five rate hikes. The average of the 2018 dots is up roughly half a rate hike.”

“The median 2019 and 2020 projections increased. The median dots show three rate hikes in 2019 and another two rate hikes in 2020. That is seven more rate hikes in total – still significantly above the market implied rate path. Moreover, the FOMC members expect to raise rates above the long-run rate, which was lifted by half a rate hike.”

“Chair Powell spent most of the press conference downplaying the median dots as any kind of policy guidance just as Chair Yellen before him. The projections are individual, he said, representing every FOMC member’s individual projections, which is then compiled into a median.”

“On the rate path, Mr Powell said that the FOMC members generally tried to find the middle ground rather than being hawkish or dovish. His press conference was generally short on surprises as well as new policy guidance.”