All eyes on Fed’s ‘dot plot’ as investors look for rate cut clues
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All eyes on Fed’s ‘dot plot’ as investors look for rate cut clues
The Federal Reserve is widely expected to hold rates steady at the conclusion of its policy meeting Wednesday. The big question is whether Chairman Jerome Powell and his colleagues will stay committed to two rate cuts in 2025. The answer will come in the form of the “dot plot,” a chart updated quarterly that shows each Fed official’s prediction about the direction of the central bank’s benchmark interest rate. Many Fed watchers expect central bank officials to stick with what they have already signaled as they weigh numerous unknowns, including the ultimate outcome of trade policies and the ripple effects triggered by a new conflict between Israel and Iran.
The answer will come in the form of the “dot plot,” a chart updated quarterly that shows each Fed official’s prediction about the direction of the central bank’s benchmark interest rate.
The last dot plot, released in March, revealed a consensus among Fed officials for two cuts this year as some were already factoring the uncertainties of President Trump’s economic policies into their projections. They made the same prediction last December.
Many Fed watchers expect central bank officials to stick with what they have already signaled as they weigh numerous unknowns, including the ultimate outcome of trade policies and the ripple effects triggered by a new conflict between Israel and Iran.
“I think they’ll end up keeping two cuts, but will stick with narrative that they need more time to see effects of tariffs on inflation,” Wilmington Trust senior bond fund manager Wilmer Stith said.
Federal Reserve Chair Jerome Powell at the Federal Reserve in Washington, D.C., on June 2. (AP Photo/Mark Schiefelbein) · ASSOCIATED PRESS
Stith added that recent milder inflation data give the Fed more room to be patient before making rate adjustments.
“Powell may say at his press conference that we’re actually seeing lower levels of inflation, but the tariff train hasn’t left the station, so to speak, so they still need more time,” Stith said.
One figure who will likely pay close attention to what happens today is President Trump. He has spent months calling on Powell privately and publicly to cut rates, even saying last week that he “may have to force something.”
Ahead of the Fed’s rate decision Wednesday, Trump again spoke extensively to reporters about his displeasure with Powell.
“I call him ‘too late Powell’ because he’s always too late,” Trump said, adding that “I think he hates me” and musing about appointing himself to the Fed.
“Maybe I should go to the Fed. I’d do a much better job.”
President Trump speaks to reporters at the White House on Wednesday. (AP Photo/Evan Vucci) · ASSOCIATED PRESS
Trump has said recently that he would not fire Powell before his term is up in 2026, a move that would almost certainly be challenged legally.
What has irked Trump is that the Fed has held rates at the current level of 4.25% to 4.5% since December after lowering them by a full percentage point last fall. Trump has been asking for another full percentage point of reductions.
Trump has been citing lower inflation as a reason for the central bank to cut, and he did so again on Wednesday.
All eyes on Fed’s ‘dot plot’ as investors look for rate cut clues
The Federal Reserve is widely expected to hold rates steady at the conclusion of its policy meeting Wednesday. The big question is whether Chairman Jerome Powell and his colleagues will stay committed to two rate cuts in 2025. The answer will come in the form of the “dot plot,” a chart updated quarterly that shows each Fed official’s prediction about the direction of the central bank’s benchmark interest rate. Many Fed watchers expect central bank officials to stick with what they have already signaled as they weigh numerous unknowns, including the ultimate outcome of trade policies and the ripple effects triggered by a new conflict between Israel and Iran.
The answer will come in the form of the “dot plot,” a chart updated quarterly that shows each Fed official’s prediction about the direction of the central bank’s benchmark interest rate.
The last dot plot, released in March, revealed a consensus among Fed officials for two cuts this year as some were already factoring the uncertainties of President Trump’s economic policies into their projections. They made the same prediction last December.
Many Fed watchers expect central bank officials to stick with what they have already signaled as they weigh numerous unknowns, including the ultimate outcome of trade policies and the ripple effects triggered by a new conflict between Israel and Iran.
“I think they’ll end up keeping two cuts, but will stick with narrative that they need more time to see effects of tariffs on inflation,” Wilmington Trust senior bond fund manager Wilmer Stith said.
Federal Reserve Chair Jerome Powell at the Federal Reserve in Washington, D.C., on June 2. (AP Photo/Mark Schiefelbein) · ASSOCIATED PRESS
Stith added that recent milder inflation data give the Fed more room to be patient before making rate adjustments.
“Powell may say at his press conference that we’re actually seeing lower levels of inflation, but the tariff train hasn’t left the station, so to speak, so they still need more time,” Stith said.
One figure who will likely pay close attention to what happens today is President Trump. He has spent months calling on Powell privately and publicly to cut rates, even saying last week that he “may have to force something.”
Ahead of the Fed’s rate decision Wednesday, Trump again spoke extensively to reporters about his displeasure with Powell.
“I call him ‘too late Powell’ because he’s always too late,” Trump said, adding that “I think he hates me” and musing about appointing himself to the Fed.
“Maybe I should go to the Fed. I’d do a much better job.”
President Trump speaks to reporters at the White House on Wednesday. (AP Photo/Evan Vucci) · ASSOCIATED PRESS
Trump has said recently that he would not fire Powell before his term is up in 2026, a move that would almost certainly be challenged legally.
What has irked Trump is that the Fed has held rates at the current level of 4.25% to 4.5% since December after lowering them by a full percentage point last fall. Trump has been asking for another full percentage point of reductions.
Trump has been citing lower inflation as a reason for the central bank to cut, and he did so again on Wednesday.