What changed in the FOMC dot plot and economic projections

15 June 2016, 21:57
Sherif Hasan

How Fed estimates changed

  • 2016 growth downgraded to 2.0% from 2.2% in the March projection
  • 2017 growth downgraded to 2.0% from 2.1%

It's officially a 2% economy (and the Fed has a history of overestimating)

  • Unemployment forecasts for 2016 and 2017 unchanged

(There was some speculation the 2016 forecast of 4.7% would be lowered because we're already there)

  • 2016 PCE inflation raised to 1.4% from 1.2% but 2017 and 2018 unchanged

(This is likely due to the rebound in commodity prices)

  • Longer-run Fed funds rate estimated at 3% versus 3.25% in March

Here are the changes in the dot plot.

New dot plot

The majority still sits at two hikes this year, but it's 11-6 now compared to 16-1 in March

Note the extremely low dot in 2017 and 2018. Most will say Evans but he's been less dovish. Brainard possible because she's been dovish but Kashkari is a rebel and he's the most likely for me. Either that or Kocherlakota snuck in a forecast.

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