By Ann Saphir and Howard Schneider
(Reuters) -Federal Reserve -President Jerome Powell on Friday indicated potential changes for the closely monitoring of “Dot Plot” interest rate Projects as part of a wide policy framework assessment at the US Central Bank and expects to complete at the end of the summer.
“About communication … in particular our communication after the meeting, we are going to be close up and we also compare ourselves with some other central banks around the world,” Powell said at a research conference in New York, referring to the summary of the FED of Economic Projections.
That is the Fed’s quarterly report on what each of his 19 policy makers expects for economic growth, the unemployment rate, inflation and the own policy percentage of the FED in the coming years.
Individual policy setup projections are deported as Dots on page 4 of the report, published at the end of the interest rate meetings of the FED in March, June, September, September and December. Economists and financial markets use those dots as a guide for what the Fed is most likely to do at rates.
Proponents of the Puntplot say that it can make monetary policy more effective, and note that in the aftermath of the global financial crisis the point plot of the Fed underlines the expectations of the US central bankers that they would keep the rates at zero much longer than markets expected.
And they note that it can be useful as a rough directional direct post, even if it is often FED policy makers and Powell themselves emphasize-no promise or even an agreed prediction, but rather a collection of sometimes unfortunate views on how the economy and policy will play.
Historically, they have often proven poor standards for the actual movements of the FED rate, largely because the economic data turns out to be different from what is expected by FED policy makers and, often, more in general.
At the end of 2021, for example, pointed to the point plot of a policy percentage of the end of 2022 of less than 1%. In fact, the Central Bank had increased rates to 4.25%-4.50%, a response to the realization that building inflation would not deteriorate without an aggressive campaign for fed tariffhike.
Over the years, FED policy makers and economists have made a range of suggestions about how the pointed plot can be improved, which was published in its current form since Powell became chairman in 2018.
During the research conference on Friday, former Fed -Vice chairman Don Kohn noted that the median of the 19 projections do not catch the uncertainty and the various alternative scenarios that can almost be as plausible. He suggested that the FED demonstrates which economic assumptions underlie the vision of each individual policy on the right policy, with which analysts can better understand the “response function” of the FED.
