Wall Street needs to tone down its reliance on the Fed dot plot
Wall Street is stuck on the dot plot again, and it’s turning into a joke. Ahead of the Federal Reserve’s meeting this Wednesday, traders, economists, and anyone who watches the Fed for a living are all stuck on one question: Will the median forecast from 19 Fed officials show one interest rate cut in 2025, or two?
That’s it. That’s the big mystery. The rates aren’t even expected to change this week—but the market still treats this dot chart like it’s some kind of divine prophecy.
According to Bloomberg, this obsession has gotten ridiculous. The projections are built on economic forecasts full of holes and uncertainty, but the entire market keeps treating them like hard science. That’s part of the reason some Fed officials are openly talking about changing the system.