Institutions: The Fed’s Hawkish Dot Plot May Surprise the Market

John Velis, Americas Macro Strategist at BNY Mellon, stated that no rate changes are expected at the upcoming Federal Reserve meeting, but the new Summary of Economic Projections could impact the market. The dot plot is expected to indicate that the scale of rate cuts in 2025 will be lower than previously anticipated. Given that the market currently expects nearly two rate cuts this year, a more hawkish dot plot could unsettle the market. The Fed has become increasingly cautious about rate cuts in 2025, noting that for most members who have already shared their views, inflation remains the primary concern. Given the ongoing uncertainty in policy, the Fed is unlikely to soften its stance on interest rates. After June, there will be only four more Fed meetings this year, making it seem increasingly unlikely that there will be time for aggressive easing within the year. (Jin10)