What The "Dots" Say: Fed Keeps 2017, 2018 And Long-Run Rate Outlook Unchanged, Raises 2019

Tyler Durden's picture

For those curious what the Fed's latest dot plot reveals, here is the summary:

  • Median target for end-2017 is 1.375%, unchanged
  • Median target for end-2018 is 2.125%, unchanged;
  • Median target for end-2019 is 3% vs 2.875% in December;
  • Long-run target is 3%, unchanged 

This suggests that at least as of now, the Fed sees no need to move its rate hike forecasts materially higher. As a reminder, the medians increased in December after most declined in previous three quarters.

Below are the dot forecast ranges, which remained the same, each with internal shifts:

  • 2017 range 0.875%-2.125%
  • 2018 range 0.875%-3.375%
  • 2019 range 0.875%-3.875%
  • Long-run range 2.5%-3.75%

And then there are the economist forecasts which are as follows:

Longer-run median unemployment rate 4.7% compares to previous forecast of 4.8% at Dec. 14, 2016 meeting

  • 2017 median jobless rate at 4.5% vs 4.5%
  • 2018 median jobless rate at 4.5% vs 4.5%
  • 2019 median jobless rate at 4.5% vs 4.5%

Longer-run real GDP median projection of 1.8% compares to previous forecast of 1.8%

  • 2017 median GDP growth 2.1% vs 2.1%
  • 2018 median GDP growth 2.1% vs 2.0%
  • 2019 median GDP growth 1.9% vs 1.9%

Longer run PCE inflation median at 2.0% compares to previous forecast of 2.0%

  • 2017 median PCE inflation 1.9% vs 1.9%
  • 2018 median PCE inflation 2.0% vs 2.0%
  • 2019 median PCE inflation 2.0% vs 2.0%
  • 2017 median core PCE inflation 1.9% vs 1.8%
  • 2018 median core PCE inflation 2.0% vs 2.0%
  • 2019 median core PCE inflation 2.0% vs 2.0%

Longer run Fed funds median at 3.0% compares to previous forecast of 3.0%

  • 2017 median Fed funds 1.4% vs 1.4%
  • 2018 median Fed funds 2.1% vs 2.1%
  • 2019 median Fed funds 3.0% vs 2.9%

It is not exactly clear why the long-run GDP is 1.8%-2.0% while the long-run Fed Funds forecast is 3.0%, nor is it clear why the unemployment rate is expected to stay well below its long-run average without even a trace of upward inflation but whatever: the Fed had one mandate - hike today, and ignore the rest.

In short: very few changes from the December forecast, and as some have suggested, the Fed may have just wanted to push forward the March rate hike, while giving itself the option to hike once more in 2017 if the Fiscal situation shoudl merit it.

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Looney's picture


Dot Plots suck!


Herd Redirection Committee's picture

I love it when they raise rates by 0.25% and pretend they could raise it to 3.75% without the financial world blowing up.

Unless all those interest rate swap derivatives have expired by now...

Looney's picture


Instead of the Dot Plot, the Fed should start using the Etch-A-Sketch Toy.  ;-)


MalteseFalcon's picture

"the Fed may have just wanted to push forward the March rate hike, while giving itself the option to hike once more in 2017 if the Fiscal situation should merit it."


Here is what the fiscal situation merits: two more hikes in 2017 and then 3 apiece in 2018 and 2019.

That's what coming.

Plan accordingly.

Arnold's picture

The plan goes out the window with the first shot fired.
Or a punch in the jaw.
Or snowflakes' scream when hit with a stick.

Something like that.

Logan 5's picture
Logan 5 (not verified) Arnold Mar 15, 2017 3:08 PM

This is unusual... Usually the dots just tell you to try the Tandoori & curry

just the tip's picture

i thought the bull mounting was more entertaining.  and more accurate.  disappointed you changed it.

Croesus's picture

She looks like exactly what she is...a Jew banker.

People can say whatever they want about Hitler, but it remains fact that if the US, Britain, and Russia had dealt with Jews in the same manner Hitler did, we wouldn't be in this mess today (though we'd have other messes).

Before the Holohoax whiners start squealing, consider that the SS only placed the French branch of the Rothschild family under house arrest, and actually helped get the Moshiach out of the country.

For the record, my last name is Goldberg. My family owned a textile business in Berlin which we sold to the NSDAP (and were well-paid for it), and were allowed to rent our home from the government. We weren't herded into any camp, and my grand uncle served in the Wehrmacht.

The Jews that did go to the camps, were there because they did something to get put into a camp. Communist agitators, criminals...that's who did time there.

Herd Redirection Committee's picture

A skilled liar/manipulator is so much more dangerous than a brutal, violent thug.   I hope people are starting to see this.   What is society's answer to sociopathy?  Its a good question, and one we better find an answer to. 

I figure something like forced labor, without the privilege of procreation?  Banishment to some God forsaken land, say Israel or Madagascar?

1stepcloser's picture

Yeah like we aren't going to have a recession in the next 3 years.... your dots are too high Janet.   So whats the federal deficit on 25 Trillion with a 5% 10 year again?

mkkby's picture

This is good news.  I care most about my purchasing power being maintained.  Fuck the printing and free money to banksters and big corps.

Bull/bear and recession/growth cycles are normal.  Don't fuck with them while making everything too expensive for regular people to survive.  Don't make it too easy for dot gov to borrow us deeper into slavery.

Maybe aunt janet is the adult that takes back the nonsense of bernanke and greenspan.  Maybe she just wants Trump to look bad.  I don't care what the reason is.  Keep raising -- faster, faster.

Seasmoke's picture

No Chance. No Shot. No Way.

Silver Savior's picture

This makes me so sad and angry at the same time. Oh well it will be more expensive to pay on the debt and that means more debt to pay for it so my long term view of a reset is on track. I am still so very fucking disgusted. Everything is barely hanging on by a thread as it is.

Dr. Engali's picture

In the mean time the rest of the western world is at zero. Once again Merikans are screwed by paying the bankers for the use of their own "money". Did I say money?  oops, my bad.

Consuelo's picture



Roadrunner cartoon of Wile E. Coyote contemplating his next meticulously crafted move, then the train hits, replete with stars...

Codwell's picture

Fed raises rates and gold jumps ? Dollars worth more and so is gold. ?You'd think this would be inverse, unless of course this interest rate move will wreck the stock market. But the market is up. 

2ndamendment's picture

Trying to forecast something like this out past a 12 month timeframe is an exercise in futility. Might as well hold a seance and ask the Ouija board and Magic 8 ball to do the predictions. 

Arnold's picture

The animal spirits of the Ouija board are not very financial savvy.

JTimchenko's picture

The Federal Reserve is completely full of sh-t! If they forecast something, you can bet dollars to donuts it won't happen!

Isn't it interesting, incidentally, that gold is up by almost $14 today, even though there is a rate hike? That's because its price has never had anything whatsoever to do with interest rate movements. Very persuasive in explaining why gold is behaving as it is, in spite of supposed "rate hikes" is this article, and other articles on the same website, starting with the post-Trump gold predictions made in November, for 2016 and 2017.


besnook's picture

it has been so long since investment goals have to change so dramatiocally. how do you invest in a rising rate environment? where does the money go? buying long bonds(especially the ten year) doesn't really make sense except as a hedge against a one and done. buying equities is just stupid, mcd has contracting revenues while trading at a pe of 24 is just one example of overbought.

one thing is sure. there is a lot of money out there with a limited choice of places to put it. too much money chasing too few goods is called inflation. yellen is bent on destroying a few trillion excess dollars.

Yen Cross's picture

 I'd trust a blind ~ folded monkey, in a midget tossing contest before , Mow Howard.

Quivering Lip's picture

Dot plot cut and pasted from 2012 for '13, 14' and '15, and they get paid for this. 

Silver Savior's picture

Federal Reserve Bank:

Is not federal

Is not a bank

Has no reserves!

Kreditanstalt's picture

Tea-leaf reading. 

rejected's picture

I'm not sure whether this is insanity, idiotic, comedic or just plain sad.

All the above?

This cartel prints and prints and prints which devalues, devalues, devalues,,, no accounting, not accountable to anyone, so corrupt it makes the Mafia look like fine upstanding citizens, yet everyone hangs on to every word these deviates say as if it were the second coming of Christ

Feel it Reel it's picture

Does raising the rates affect the Pension plans in a positive or negative way that are going broke in the public sector?? I've read numerous times that zero or near zero rates have caused these pensions to go broke or at least go broke faster....not sure if this is part of the Fed's plan to try and save these pensions in a sneaky way....

katchum's picture

There's no way they can raise it to 3%, because then the bond yields will go higher than 3% and that's when P/E ratios start to fall, leading to a large downward retracement of stock valuations.

whoisjg's picture

A very difficut situation. We need to climb out of ZIRP yet at the same time the real unemployment rate is 24% and real inflation is 11%

What to do ?

They should be climbing out of zirp, but this is too fast. Half this rate would be better.  Climb out at 0.5 a year not 1.0 a year.  Its too fast and people need time to adapt especially at the beginning.

This is very dangerous as we are on the precipice of depression

Trump hasn't had time to get any of his policies going. They should hold all rate movement for a Year for trump to get his policies in place. And trump is struggling getting anything at all done, no repeal of the H-1B visa genocide for american engineers, no new trade deals, no new cash available for entrepreneurs as banks continue not loaning to startups.  ...read more