The dot plot from Federal Reserve members outlines the projection for rates at the end of 2026, 2027 and 2028. At the March meeting, the FOMC was projecting 1 cut in 2026 to 3.4%, and another in 2027 to 3.1%. The current projections shows.
- The end of 2026 3.8%, vs 3.4% in March
- The end of 2027 3.6% vs 3.1% in March.
- The end of 2028 3.4% vs 3.1% in March
The skew of the expectations for June shows:
Looking at the skew,
- 1 member sees a cut
- 8 members see unchanged
- 3 see 1 hike
- 5 see 2 hikes
- 1 sees 3 hikes
There was one who did not put in a projection which is assumed to Warsh not putting in a projection.
The skew is bearish.
The March skew of expectations showed that for 2026,
- 1 (Miran) who looked for the rate to reach 2.5% to 2.75% (4 cuts)
- 2 who saw 3 cuts
- 2 who saw 2 cuts
- 7 who saw 1 cut
- 7 who did not see a cut
The expectations for GDP, unemployment, and inflation shows lower GDP in 2026, lower unemployment and sharply higher inflation for headline PCE and core PCE.
- GDP for 2026 was lower at 2.2% vs 2.4%
- Unemployment rate at 4.3% vs 4.4%
- PCE headline at 3.6% vs 2.7%
- PCE Core 3.3% vs 2.7%
For 2027 PCE and core PCE remains above 2.0% at 2.3% and 2.5% respectively. In 2028 the estimates are near the 2% target at 2.0% and 2.1% respectively.
This article was written by Greg Michalowski at investinglive.com.
