Fed Chair Warsh Likely to Skip Dot Plot in Upcoming SEP Release
Analysts expect new Fed Chair Kevin Warsh to withhold his individual rate projection from the quarterly Summary of Economic Projections, a departure from post-crisis practice that could alter market expectations.
The Federal Reserve’s Federal Open Market Committee is scheduled to publish its quarterly Summary of Economic Projections (SEP) on Wednesday, detailing median forecasts for interest rates, unemployment, inflation and GDP. Market participants traditionally rely on the accompanying "dot plot" – a grid showing each member’s expected path for the policy rate – to gauge the Fed’s outlook.
Sources close to the meeting anticipate that Chair Kevin Warsh will not submit a dot this time. Warsh, who took office in May, has publicly criticized the dot plot and other forms of forward guidance, arguing they constrain the Committee’s flexibility. > "It seems to me fairly likely that he doesn't want to submit a rate forecast," said Bill English, former Fed monetary-affairs head and Yale professor.
Economists at major banks echo the expectation. Aditya Bhave of Bank of America said Warsh is unlikely to provide a dot, while Goldman Sachs’ David Mericle noted the assumption in a research note, adding that the view is based on Warsh’s past statements.
During his confirmation hearing, Warsh argued that the SEP contributes to “overcommunication” and cited the Fed’s earlier “transitory” inflation label as a factor that led to aggressive rate hikes. He suggested the central bank should wait until meetings to make decisions, allowing more deliberation and reducing the risk of compounding errors.
Market analysts warn that the absence of a dot could affect market dynamics. Liz Ann Sonders, chief investment strategist at Charles Schwab, said the SEP has historically moved markets despite mixed accuracy. Claudia Sahm, chief economist at New Century Advisors, cautioned that skipping the dot might be interpreted as the Fed trying to conceal a hawkish shift, potentially harming credibility.
The upcoming meeting will also test whether Warsh will alter the post-meeting statement or discontinue the customary press conference, further signaling any changes to the Fed’s communication approach.
