Warsh’s roadmap for upending the market: no more dot plot or forward guidance
Folks, today at 11:30 a.m., Fed Chair Warsh is speaking at the IMF in Bangkok.
But he wants to do something bigger than raise rates:
Scrap the dot plot the Fed has used for over a decade.
What does that mean? The dot plot is the Fed’s roadmap for the market.
Each quarter, the rate forecasts of 19 officials are plotted on a chart.
Investors use it to guess where rates will be next year, and how many cuts or hikes there’ll be.
Warsh says it constrains policy flexibility and amplifies the market’s overreaction to information.
He’s already removed “forward guidance” from post-meeting statements.
He’s also convened a working group, which outsiders expect will recommend scrapping the dot plot.
He’s openly praised Greenspan’s “you can’t understand what I’m saying” style.
But internal resistance is out in the open.
After the September rate hike, Fed officials made over 40 public appearances to deliver their message,
forcefully tamping down expectations of further hikes.
The market now relies on officials’ comments, not a roadmap.
If the dot plot is really scrapped, what will anchor the market?
Of course, ending forward guidance isn’t necessarily a bad thing.
It could make markets more data-driven and give policymakers more flexibility.
But short-term volatility will definitely rise—with no anchor, pricing will be based entirely on guesswork.
And this is controversial as a “step backward in transparency”—academics are fiercely divided.
My view is clear:
At 11:30 today, first see whether he mentions dot plot reform. That matters more than the rate decision itself.
After the speech, the Fed enters its blackout period. The October 27–28 FOMC meeting will reveal what’s really going on.
Don’t make a big directional bet before or after the speech.
The market used to ask the Fed, “Where are you headed?”
From now on, it can only ask, “What do the data tell me?”
But they’ll always be the ones setting the rules 😂
$BTC
#沃什推动缩减前瞻指引和点阵图 #美联储 #Bitcoin
Folks, today at 11:30 a.m., Fed Chair Warsh is speaking at the IMF in Bangkok.
But he wants to do something bigger than raise rates:
Scrap the dot plot the Fed has used for over a decade.
What does that mean? The dot plot is the Fed’s roadmap for the market.
Each quarter, the rate forecasts of 19 officials are plotted on a chart.
Investors use it to guess where rates will be next year, and how many cuts or hikes there’ll be.
Warsh says it constrains policy flexibility and amplifies the market’s overreaction to information.
He’s already removed “forward guidance” from post-meeting statements.
He’s also convened a working group, which outsiders expect will recommend scrapping the dot plot.
He’s openly praised Greenspan’s “you can’t understand what I’m saying” style.
But internal resistance is out in the open.
After the September rate hike, Fed officials made over 40 public appearances to deliver their message,
forcefully tamping down expectations of further hikes.
The market now relies on officials’ comments, not a roadmap.
If the dot plot is really scrapped, what will anchor the market?
Of course, ending forward guidance isn’t necessarily a bad thing.
It could make markets more data-driven and give policymakers more flexibility.
But short-term volatility will definitely rise—with no anchor, pricing will be based entirely on guesswork.
And this is controversial as a “step backward in transparency”—academics are fiercely divided.
My view is clear:
At 11:30 today, first see whether he mentions dot plot reform. That matters more than the rate decision itself.
After the speech, the Fed enters its blackout period. The October 27–28 FOMC meeting will reveal what’s really going on.
Don’t make a big directional bet before or after the speech.
The market used to ask the Fed, “Where are you headed?”
From now on, it can only ask, “What do the data tell me?”
But they’ll always be the ones setting the rules 😂
$BTC
#沃什推动缩减前瞻指引和点阵图 #美联储 #Bitcoin