U.S. Outlook: Dissecting the dots

Scott Anderson
Posted by Scott Anderson
Chief Economist

Every newspaper article on the Fed decision this week cited the downward migration of the median dot-plot from three hikes next year to just two hikes.

View of a eagle statue on Federal Reserve building in DCBut just looking at the median forecast gives one a false sense of precision about the future of U.S. interest rates.

For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on Dec. 21.

Key observations:
  • The FOMC members neatly divide into three distinct camps when it comes to interest rate expectations for 2019.
  • The market appears to have come to a far different conclusion than the FOMC about the proper stance of monetary policy and interest rates.
  • It is important to note that markets get things wrong sometimes; they can overreact especially during times of market panic like we seem to be going through right now. But sometimes markets see our economic future before analysts do, or even before the Fed does.

Read my full report.

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