We infer which dot each FOMC participant put down for 2017 and 2018 at the December 2017 meeting. Takeaways:
1. As we had expected, the median expectation for rate hikes in 2018 remained at three. That said, there were more dots implying two hikes, instead of three hikes, for 2018 than we had anticipated. 2. Based on their recent remarks and the distribution of projections, voters next year who would likely advocate fewer than three hikes include Brainard, Bostic, Evans, and Harker, as well as, of course, Bullard and Kashkari.
3. Only four participants see the appropriate pace of rate hikes next year to be more than the median of three. Of those, we would expect that most would like to see a hike each quarter. 4. A rate hike in March would offer the FOMC the most flexibility to maintain the annual pace at two, three, or four hikes. We expect that the Committee will take advantage of that flexibility and hike in March.
5. The changing composition of the FOMC, specifically the addition of new Fed Governors, means that one must be careful about reading too much into the December dots. Without any further information on the nominations, we would expect the new additions to likely hew close to the median.
|Year||Number of Hikes|
|2017||3||All but Evans and Kashkari|
|2018||2||Brainard Evans Bostic Harker|
|2018||3||Dudley Powell Yellen Kaplan Williams Quarles|
|2018||4||Mester Rosengren Richmond Fed|