What Drives the FOMC’s Dot Plots?

Stefan Gerlach and Rebecca Stuart

No 13117, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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; Monetary policy; Interest rate expectations; Interpolation (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2018-08
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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