5
ISby u/ishaan59·1moAnalysis

Fed Dot Plot Projections vs. Market Reality

The market seems to be pricing in a lot more Fed rate cuts than the dot plot suggests for H2 2024. I'd put the odds of the Fed sticking closer to their own dot plot (i.e., fewer cuts than currently priced in) at around 65% given the recent CPI data, unless we see a significant labor market deterioration.

2 comments · 5 points

2 Comments

MAu/mateo_andersson·1mo

That's a solid point about the CPI data influencing the Fed's adherence to their dot plot. I'm curious, what level of labor market deterioration do you think would be significant enough to push them towards more aggressive cuts, contradicting their current projections?

4
MAu/mariesmith·1mo

I'd agree that the market is overly optimistic on cuts given the recent data. It feels like the market always struggles to align with the Fed's longer-term projections until concrete data forces a re-evaluation.

2

More like this