Economics
The Fed Wants Markets to Stop Taking the Dot Plot So Seriously
- Vice Chair Fischer leading efforts to improve rate forecasts
- St. Louis Fed's Bullard considering withholding his dot
Fed Dots Show Internal Inconsistencies: UBS's Matus
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Since the day they were unveiled in January 2012, the Federal Reserve’s interest rate forecasts have been criticized for taking on too much importance and become fodder for mockery in financial markets.
Now, officials are trying to adjust that signal while preserving transparency. One problem: The quarterly forecasts -- arranged in a so-called dot plot where the little circles represent each Fed officials’ projection for the appropriate level of the benchmark federal funds rate -- become stale as new data arrive. Yet they remain out there as the Fed’s best guess about future policy.