Plotting Interest Rates: The FOMC's Projections and the Economy

35 Pages Posted: 6 Mar 2018

See all articles by Stefan Gerlach

Stefan Gerlach

Central Bank of Ireland; Centre for Economic Policy Research (CEPR)

Rebecca Stuart

Central Bank of Ireland

Date Written: March 2018

Abstract

The FOMC's "dot plots" contain members' views regarding what federal funds rate will be necessary in the end of this and the coming years for the FOMC to achieve its statutory objectives. The dots can be interpreted as instantaneous forward rates. We fit a curve, which is characterised by four parameters, through them and study how it moves with the economy. We find that the level of the federal funds rate the month before the FOMC meeting, the unemployment rate and (updated) estimates by Laubach and Williams (2003) of the natural real interest rate shape the curves.

Keywords: Federal Reserve, interest rate expectations, monetary policy

JEL Classification: E52, E58

Suggested Citation

Gerlach, Stefan and Stuart, Rebecca, Plotting Interest Rates: The FOMC's Projections and the Economy (March 2018). Available at SSRN: https://ssrn.com/abstract=3134419

Stefan Gerlach (Contact Author)

Central Bank of Ireland ( email )

P.O. Box 559
Dame Street
Dublin, 2
Ireland

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Rebecca Stuart

Central Bank of Ireland ( email )

P.O. Box 559
Dame Street
Dublin, 2
Ireland

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
0
Abstract Views
337
PlumX Metrics