Fed Chair Warsh expected to withhold 'dot' from central bank's interest rate outlook

When the Federal Reserve wraps up its policy meeting Wednesday, one important thing could be missing — a dot.

The central bank's Federal Open Market Committee is set to release its quarterly update of where individual officials expect interest rates to head this year and through 2028 and beyond. Markets closely parse the grid, known more commonly as the "dot plot," for information on how Fed officials view the economy and its impact on monetary policy.

However, most Fed watchers on Wall Street expect new Chair Kevin Warsh won't participate, either because he feels he's not ready after having only been in office since May 22 — or simply because he doesn't like the dot plot and its implications for "forward guidance."

Declining to submit a dot would counter some 14 years of post-financial crisis practice for the Fed, and risk alienating other FOMC officials who favor the way it helps them communicate with the public. However, it also could be an effective first step for a central bank leader who has vowed fundamental changes for how the institution operates.

"It seems to me fairly likely that he doesn't want to submit a rate forecast," said Bill English, former head of monetary affairs at the Fed and now a professor at Yale. "There may be others on the committee who don't particularly like the dot plot, who might be willing to do that, too."

Warsh objects to the dot plot and other methods of forward guidance because he believes they limit the Fed's decision-making capabilities.

The dot plot belongs to a larger set of data called the Summary of Economic Projections, which also includes the outlook for unemployment, inflation and gross domestic product. The SEP is updated quarterly and includes the median outlook for each category and as such is not an official forecast but merely the midpoint of the range among FOMC meeting participants.

Bank of America economist Aditya Bhave expects Warsh won't submit a dot, while Goldman Sachs economist David Mericle said in a note that, "We assume that Warsh will not submit dots in light of his past criticism of forward guidance, but we are not sure."