Investor Presentaiton
FOMC Forecasts Risks Overtightening
The Federal Reserve's most recent dot plot anticipates the real FFR, implied by
adjusting its forecast for nominal FFR by its own forecast for Core PCE inflation, will
increase from 190bps in December 2023 to 250bps by December 2024
FOMC Summary of Economic Projections | September 2023:
Fed Funds Rate Projection
--Implied Real Fed Funds Rate
5.6%
6.0%
5.4%
5.1%
5.0%
4.0%
3.0%
2.5%
3.9%
2.9%
2.5%
1.9%
2.0% 1.5%
1.6%
0.9%
1.0%
0.5%
0.0%
Current
Dec-23
Dec-24
Dec-25
Dec-26
Longer-Run
Fed Funds Rate
5.4%
5.6%
5.1%
3.9%
(-) Core PCE YoY Inflation
(3.9%)
(3.7%)
(2.6%)
(2.3%)
2.9%
(2.0%)
2.5%
(2.0%)
Implied Real Fed Funds Rate
1.5%
1.9%
2.5%
1.6%
0.9%
0.5%
The Fed dot plot implies a significant risk of unnecessarily overtightening given the meaningful
progress on inflation amidst the increasing economic headwinds and emerging risk factors
Source: Federal Reserve
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