Fed's Goolsbee: US rate-path 'dot plot' needs more context
PALO ALTO, California - The U.S. Federal Reserve should beef up its quarterly "dot plot" of policymakers' interest-rate-path views by including the individual economic expectations that inform each one, Austan Goolsbee, president of the Chicago Fed, said on Friday.
The latest one, published in March, shows the median Fed policymaker expected to need to cut short-term borrowing costs three times by the end of this year, though nearly half saw fewer rate cuts, and several saw just one rate cut or none. It's impossible to know, for instance, if a policymaker who writes down fewer rate cuts this year fears the economy is overheating, or simply believes the economy has the capacity to grow faster and therefore can tolerate higher rates.
"Because it can’t be connected to the economic conditions the participant thinks will justify that interest rate, there is nothing to tell us why they think this a reasonable choice," he said. "A matrix that anonymously matches the economic forecasts to the rate path for each participant would answer some important questions."
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