Once-Disparaged Fed Rate Forecasts Now Seen as Crucial Guidance

Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey, wondered how long Yellen’s embrace of the dot plot would last.

“The Fed chair will highlight the dots if and only if they serve to illustrate the particular policy narrative she wants to deliver,” he said in a note today to clients.

This week, they performed that task. A year ago, they did not. Back then the rate projections rose at the same time that the Fed was seeking to assure investors that it would keep credit ultra-easy for a considerable time.

“The challenge for the FOMC at this point is to strengthen the dot-plot forecast process in order to make it a better reflection of the committee’s expectations,” Crandall said.