Big News Is They're Starting to Question Dot Plot Usefulness

The Fed's meeting made news as usual earlier this month, but for once its interest rate decision (keeping its fed-funds target range at 1.50% – 1.75%) wasn't the big story. Nor was the infamous dot plot's projection of no rate moves in 2020. Rather, to us the big news was Fed people questioning the dot plot's usefulness in the first place. When asked, Fed head Jerome Powell said, “I think properly understood, it can be useful but ... if you focus too much on the dots, you can miss the broader picture.” Some piled on, arguing the dot plot should be scrapped. Others agreed with Powell: Take Fed dot plots in context—and skeptically. We find this debate encouraging, as we have long questioned why people focus so much on a report that isn't even an attempt to forecast the Fed's decisions. In our view, the more investors understand its limitations and stop seeing it as a divining rod, the better off they will be.