What Drives the FOMC's Dot Plots?

34 Pages Posted: 21 Aug 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: August 2018

Abstract

The Federal Open Market Committee (FOMC) releases quarterly its members' views about what federal funds rate will be appropriate at the end of the current and the next two or three years, and in the "longer run." We construct constant horizon interest rate projections one, two and three years ahead and use real-time data on 32 variables to study how these variables impact on the FOMC's interest-rate setting. News regarding the labour market is particularly important. At the shortest horizon, prices and financial market news is also significant; at longer horizons, household's financial situation also matters.

Keywords: Federal Reserve, interest rate expectations, interpolation, monetary policy

JEL Classification: E52, E58

Suggested Citation

Gerlach, Stefan and Stuart, Rebecca, What Drives the FOMC's Dot Plots? (August 2018). Available at SSRN: https://ssrn.com/abstract=3235600

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

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