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By Ann Saphir and Howard Schneider
SANFRANCISCO/ WASHINGTON (Reuters) – While Federal Reserve policymakers are questioning how to minimize their quarterly interest rate projections without removing it altogether, some are considering a compromise: delaying publication to reduce the odds that badysts treat it as a mere snapshot of where the Fed's policy goes.
Four times a year, the Fed publishes a table of "points" representing the anonymous and individual projections of the key rates of the Fed's decision-makers for the coming years. Published at the same time as the group's monetary policy statement, the view of the rate of "points" sometimes overwhelms the more nuanced statement.
The idea of a fix comes from a general discussion on communications within the Fed and should not be completed until next year.
In the meantime, the next point chart will be released after the Fed's monetary policy meeting on June 18 and 19, when the central bank will keep rates unchanged while recognizing that economic tensions are increasing economic hardships. . The way these headwinds are reflected in the June points could be disastrous.
Fed Chairman Jerome Powell has expressed his frustration at the inordinate influence of investors on traders and investors, who use it as a kind of Fed policy forecast. It has never been the intention of officials to gather 17 distinct ideas on the appropriate path of interest rates, which is supposed to be distinct from the collective vision expressed in the Fed statements after the meeting.
"The problem with the plot of points, is that it is published at the same time as the statement," said James Bullard, chairman of the St. Louis Federal Reserve, last week , on the sidelines of a Fed conference on monetary policy strategy and communications.
This creates an "enigma" for Powell, said Bullard.
"If it were published at another time, it would perhaps keep transparency, but reduce the enigma aspect and (continue) to focus on the committee statement, which is really what the committee actually decided, "he said.
Bullard did not hide his dislike for the plot, and last week he was unsure of his support for the idea of a delay between his colleagues. The Fed rarely makes changes without months, if not years of debate.
According to the minutes of the Fed's March meeting, Fed Vice President Richard Clarida heads a Fed sub-committee.
In an article on communications for the Fed's conference held in Chicago last week at the request of Clarida, Stephen Cecchetti, professor of economics at Brandeis University, and Kim Schoenholtz, professor at the University of California. University of New York University's Stern School of Business, called for a quicker release of the context. by publishing it.
Currently, details on the uncertainty bands are released three weeks after the fact, with the minutes of the policy meeting; an anonymous matrix linking the economic forecasts of each decision-maker to its correlated rate projection takes five years, while we know exactly which point belongs to the decision-maker.
Delaying the publication of the "point chart", even just three weeks before the publication of the minutes, would be "regrettable" and "significantly reduce the information content of what is produced at the time of the meeting," Cecchetti said. Reuters.
For a chart on the Fed's dot plot, click on: https://tmsnrt.rs/2WN7XOA
DO NOT A MAP, BUTLOOKSASA
Never conceived as a consensual forecast of the Fed, the chart was first published in 2012 and quickly became a pillar of the Fed's efforts to keep politics easy, as it made it clear to policymakers that the rates were to stay low for a moment.
More recently, this has been a source of volatility. At the Fed's conference last week, Powell said he had "diverted attention" from the important question of how the Fed could react to unforeseen economic developments.
Take, for example, the version released at the end of the Fed's December meeting, which graphically presented two further rate increases for 2019.
The minutes of the meeting showed that these projections were subject to "considerable uncertainty" and that policymakers collectively wanted their post-meeting statement to be reliant on economic data to guide future action.
But these details were published only three weeks later and were not made public immediately after the meeting.
At his December press conference, Powell was asked several times about the plot.
"I would not take it as a sign of current politics or short-term politics," Powell said.
But as Cecchetti and Schoenholtz note in their article, this is exactly what a cottage industry of "dotologists" is trying to do every quarter.
The escalating trade tensions and recent signs of a cooling labor market are currently fueling financial market expectations regarding three interest rate cuts by the Fed by the end of this year. l & # 39; year.
The latest dot chart, released in March, showed that the 17 Fed decision makers did not expect any rate changes over this period.
(Report by Ann Saphir and Howard Schneider, edited by Dan Burns, Andrea Ricci and Lisa Shumaker)
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