Fun Facts about the Fed’s Dots
Markets are still freaked out by the FOMC’s median “dot” yesterday, pointing to an additional rate hike in 2017. But the “dots” show no more additional hikes in 2018 or 2019. One new hike in three years isn’t a big deal. For that matter, the 2017 hike isn’t a policy tightening – it is explained perfectly by applying a standard Taylor Rule coefficient to the drop in the median “dot” for 2017 unemployment. The 2017 “dot” is still lower than thought in June. And if we look at average rather than median, it barely changed at all from September. The move in markets isn’t about the Fed, or at least it shouldn’t be. Markets and the Fed are simply tracking the momentous changes since the global economy came out of near-recession, and following Brexit, turned away from secular stagnation and toward growth.