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Letter from Washington

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FOMC two-day meeting with a 2:30 PM Wednesday press conference.  I will send a transcript as soon as it becomes available.

“Fed Officials Wrestle With a ‘Dot Plot’ Dilemma. Officials are set to release rate projections on Wednesday, but they have caused confusion.”  This morning’s Wall Street Journal article leads with:

Federal Reserve officials aren’t quite sure what to do about their dots.

Every quarter, the central bank produces a chart of 19 officials’ individual projections for interest rates, with a dot representing each person’s expected value of the Fed’s benchmark rate in coming years. Most of them see this so-called dot plot as a valuable communications tool, but it has increasingly contributed to investor confusion.

Officials are set to release an updated dot plot on Wednesday at the end of their two-day meeting. Most appear likely to project either no rate moves or one increase this year, based on recent public statements and interviews.

That would mark a significant change from December, when officials raised rates and the dots showed most officials anticipated between one and three increases this year, with a median projection of two.

The dots have caused problems when the economy is at an inflection point, such as during the current slowdown, because they reflect a baseline outlook—the rate path, if the economy behaves according to each individual’s expectations. The dots don’t show how officials gauge risks to their forecasts.

Officials emphasize the projections don’t represent a rigid rate plan. But the December dot plot rattled many investors who worried the Fed was underestimating the headwinds to growth.

President Trump’s schedule (EDT):

11:30 AM:  Receives a briefing on the Economic Report of the President;

12:30 PM:  Lunch with Vice President Pence;

  1:45 PM:  Daily intelligence briefing; and

  5:45 PM:  Attends a Greek Independence Day Celebration.

TUESDAY:        Meets with Brazil’s President Bolsonaro.  The two will hold a joint press conference.

WEDNESDAY:  Tours the Army Tank Plant at Lima, Ohio;

THURSDAY:     Speaks to the Business Roundtable’s Meeting in D.C. 

Economic Report of the President to be released today, here.






Political Insider

About Pete Davis

Pete Davis

Pete Davis advises Wall Street money managers on Washington, DC policy developments that affect the financial markets. Visit his website here daviscapitalinvestmentideas.yolasite.com.

Articles by Pete Davis

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