There will plenty for Wall Street to parse in today’s Fed policy decision and Chairman Jerome Powell’s subsequent press conference. But one thing investors won’t see is the so-called dot plot projection.
The dot plot, or “Summary of Economic Projections” in Fed-speak, is a special treat for analysts because it shows where the Fed’s policymakers expect the federal funds rate to be in the future, with projections for the full year and beyond.
The Federal Open Market Committee, the Fed’s policymaking group, meets eight times a year but only releases the dot-plot once a quarter. Why? That’s just the way it’s done. We get a dot plot in March, June, September and December.
So the market is even more likely to closely dissect Chairman Powell’s speech, syllable by syllable, as economists and investors seek out hints of when the central bank might begin to scale back its aggressive rate hikes. Markets are already preoccupied with what the Fed will do next month, having priced in a fourth-straight 0.75 percentage point rate hike (also called 75 basis points) for the November meeting.
“A 75 basis-point hike from the Fed this week is practically a done deal,” wrote Luke Bartholomew, senior economist at investment firm abrdn. “The much bigger question is around how the Fed signals its future policy path.”
But don’t expect Powell to make any big pronouncements. He’s been at this game a while now and is unlikely to talk himself into a corner the way he did in 2021 when he repeatedly declared inflation would be “transitory.” The Fed chair is measured and buttoned down under normal circumstances — you can count on him holding his cards especially close today as financial markets hang on his every word.
