The Federal Reserve has left its key interest rate unchanged as inflation cools. However, the central bank did change its projection of future rates, pricing in only one cut this year. Yahoo Finance’s Alexandra Canal breaks down the Fed’s “dot plot” and what it signals about rate cuts.
The dot plot, released each quarter, is a chart that tracks each of the 19 Fed officials’ federal funds rate projections. Four Fed officials believe funds will stay where they are, while seven believe there will be one rate cut. Eight officials, however, believe that there will be two cuts. The aggregate median coming out of this quarter’s dot plot sits at just one rate cut priced in for the year.
Canal emphasizes that while the dot plot is simply a projection, it is an important tool for transparency. The dot plot was first introduced after the 2008 financial crisis, providing investors with some economic transparency.
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