June 17 (Reuters) – Federal Reserve Chairman Kevin Warsh appears not to have submitted an interest-rate-path projection as part of the central bank’s quarterly forecasts, a break from past practice that may suggest he is already at work on his promised “regime change” for the Fed just three weeks into his tenure.
The central bank’s newly published “dot plot” released on Wednesday depicting the anonymized individual rate-path views of policymakers featured just 18 submissions. The full slate of Fed policymakers numbers 19. The Fed did not name the one who did not submit projections.
But analysts will be quick to attribute the omission to Warsh, given his longstanding criticism of forward guidance and the Fed’s forecasts, and the fact that he is the only addition to the Fed’s policymaking table since last round.
The Fed has published a dot plot four times every year since 2012 to give the public a sense of where the central bank may be headed on rates — to a cut, a hike, or perhaps an extended hold.
Fed policymakers themselves concede it is imperfect — it doesn’t, for instance, show how each policymaker’s forecasts for the labor market and inflation affect their rate-path view. Nonetheless, it has been part of a suite of progressively more open communication practices that policymakers credit with helping investors and the wider public understand the central bank’s thinking, which they believe has made monetary policy more effective.
Warsh, however, has long criticized such forward guidance, arguing it locks policymakers into a specific rate path without due regard to changing economic data. It may be that Warsh’s apparent decision not to participate does not augur anything at all, but merely reflects the fact that he is still settling into his role. But it will surely add to speculation about the future of the dot plot and the Fed’s broader communication strategies.
The only Fed policymaker to withhold a “dot” previously was former St. Louis Fed President James Bullard, who regularly submitted his near-term rate-path projections but did not provide an estimate for the longer-run neutral rate.
Only 17 of 19 policymakers submitted projections for 2028, the Fed said.
(Reporting by Ann Saphir; Editing by Andrea Ricci)
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