Fed: Where the dot points are headed? - Charles Schwab

According to analysts at Charles Schwab, Fed watchers will be waiting to pore over the Fed’s updated ‘dots plot’— part of the FOMC's Summary of Economic Projections.

Key Quotes

 “As of the last meeting, the median estimate for 2018 suggested the Fed would raise rates three times this year. However, we believe there is a risk that the median dots estimate could move up to four rate hikes this year.”

“It would take just a handful of FOMC members to shift their dots to get the median to four rate hikes for 2018, and a few of them have already publically suggested that they could raise their estimates.”

“After all, even though the Fed has already raised interest rates five times in the current cycle, the federal funds rate is still low by historical standards. In fact, it is still lower than the inflation rate, meaning the “real” rate is still negative. Any signs that inflation is rising are likely to prompt more hikes.”

“It’s also worth keeping in mind that while inflation is important, the Fed is also keen to restock its toolbox after years of keeping rates low. In order to prepare for the next potential economic setback, the Fed will want to bring rates back to the point where it could cut them again to spur growth if needed.”