With both the Federal Reserve and ECB statements out of the way, I think it is safe to say that there was little to surprise us in the communication from Governors Powell and Draghi. If I had to say something, it is probably that the message underlined the very different positions of the two central banks. Yes, ECB confirmed that an end to QE is in sight, but it is also clear that the ECB fears, and will not tolerate, disappointments in terms of inflation and growth outcomes. The FED, on the other hand, is becoming ever more confident in the outlook for the US economy and the dispersion of views within the FOMC are gradually becoming more aligned around continued hikes.
– Darn it, I should have thought of it sooner, of course. One thing that almost all MB-users are set to create at some point or another during their work, is an indicator of the FED’s monetary policy outlook, some version of the by now infamous “dot-plot”. Therefore I, for your convenience, have scoured the internal Macrobond libraries and refined a few earlier versions that I think are quite nice (even though we don’t have a good way to completely replicate the original FED dot-plot)-
This first version is the one that I think you will find closest to the original:
At times, however, focus is instead on the revisions:
But my personal favorite is undoubtedly this one, from one of our Macrobond whiz-kidz, Alex Pelle, where the dot-plot is compared to the OIS pricing:
It is easy to see how market pricing and FED forecasts are quite well aligned (I know…). At least until 2019 (-ish), when market expectations are considerably more muted. Whatever happened to that old market adage, “Don’t fight the FED”? – As usual, I guess time will tell.
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