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Discussion Paper
Why Do Forecasters Disagree about Their Monetary Policy Expectations?
While forecasters generally disagree about the expected path of monetary policy, the level of disagreement as measured in the New York Fed’s Survey of Primary Dealers (SPD) has increased substantially since 2022. For instance, the dispersion of expectations about the future path of the target federal funds rate (FFR) has widened significantly. What explains the current elevated disagreement in FFR forecasts?
Report
How Do Market Expectations React to the FOMC Dot Plot?
The public pays close attention to Federal Reserve communications about future monetary policy, but it remains an open question how those communications shape the public’s expectations for the path of policy rates. We explore how market expectations adjust to the information provided in the “dot plot” of the Summary of Economic Projections, which contains the Federal Open Market Committee’s assessment of the appropriate future path of the federal funds rate. The results shed light on the market interpretation of forward guidance and its efficacy as a communication tool. We find that ...