FOMC Voting Rotation Matters More Than A Hawkish Dot Shift
As excerpted from Michael Read, Bloomberg Markets Live Reporter and Commentator
The hawkish dot plot should be treated with an even greater degree of skepticism than usual.
Firstly, dots are individual projections, do not distinguish between voting and non-voting members and likely reflect views from policy makers whose terms will come to an end over the dot horizon. They aren’t really summary forecasts or a promise of action and are most certainly not fungible by any means.
Secondly, while we undoubtedly had a technical shift in the 2022 median dot and 2023 snapping up to 1.5 hikes (we can put the new 2024 dot on the bench for the time being) the key point here is exactly who is going to do the voting. We can spend the next few weeks and months playing guess-the-dot, or we can look at the voting rotation on the FOMC to analyse the balance of power.
In 2022, four hawkish regional Fed Presidents rejoin the voting roll (Bullard, George, Mester, Rosengren) with two doves (Evans, Daly) dropping off. The “year of the hawks“ gives the 2022 hawkish shift more credibility assuming the Fed’s accelerated tapering is completed mid-2022 with few hiccups along the way.
Beyond that it gets a bit messy. In 2023, the FOMC voting bias is flipped on its head. Two hawks rejoin (Harker/Kaplan) but a broad range of the current hawkish contingent are benched as a flock of doves, including Evans/Kashkari assume voting positions… all while dots (currently) point to three hikes.
Plausible? Sure. Probable? Less so.
Thu, 09/23/2021 – 21:40