|
|
|
|
|
|
|
|
|
|
The Problem With Wall Street’s Fixation on the Fed Dot Plot
|
|
|
|
|
|
|
|
The Federal Reserve is widely expected to keep interest rates on hold Wednesday, shifting focus to officials’ economic and rate projections. Wall Street is focused on whether the Fed’s dot plot will project one or two rate cuts for 2025. The focus on the dot plot reflects the lack of suspense for a meeting at which rates are expected to be left alone. And the Senate passed legislation to regulate a widely used type of cryptocurrency, a key victory for the digital-asset industry after it poured money into last year’s election.
Please note: The Central Banking newsletter won't be published Thursday in observance of Juneteenth in the U.S. We will be back Friday.
|
|
|
|
The Problem With Wall Street’s Fixation on the Fed Dot Plot
|
|
|
|
|
|
Illustration: Rachel Mendelson/WSJ, Andrew Harnik/Getty Images, iStock
|
|
|
|
|
|
On the eve of Wednesday’s Federal Reserve decision, traders, economists and central-bank watchers across Wall Street are fixated on a single, perplexing question: Will the median of 19 policymakers project one or two rate cuts in 2025?
The amount of attention on the Fed’s “dot plot” partly reflects the lack of suspense for a meeting at which interest rates are widely expected to be left alone.
Still, the focus borders on the absurd given the high degree of uncertainty behind the economic forecast upon which officials build these quarterly interest-rate projections. It illustrates why some officials are ready to give the exercise a rethink.
The Fed releases a dot plot at every other meeting. Each dot on a matrix grid represents one official’s rate projection for the end of the year under appropriate interest-rate policy.
|
|
|
|
Trump’s Tariff Clock Is Ticking After G-7 Fails to Yield Deals
|
|
|
Leaders from some of America’s biggest trading partners traveled to the Group of Seven industrial nations summit in Canada this week hoping for deals with President Trump. They left empty-handed.
|
|
|
The $10 Billion Proposal to Speed Up U.S.-Mexico Trade
|
|
|
|
U.S. Import Prices Held Steady in May
|
|
|
Import prices into the U.S. were unchanged last month, Labor Department data showed Tuesday. Economists polled by The Wall Street Journal had expected prices to be 0.1% lower compared with a month earlier
|
|
|
Retail Sales Fell More Than Expected in May
|
|
|
Consumer spending dropped more than forecast last month, after a surge earlier this year in car buying. Retail sales fell 0.9% in May from a month earlier, the Commerce Department said. That was worse than the 0.6% decline economists polled by The Wall Street Journal expected. The decline was partly driven by lower levels of auto purchases.
|
|
New Megabill Estimate Sees Worsened Deficit Picture
|
|
|
Republicans’ tax-and-spending megabill would increase budget deficits by $2.8 trillion through 2034 after factoring in the projected economic growth the bill would create, leading to 15% more red ink than previously estimated, according to the Congressional Budget Office.
|
|
|
|
|
|
|
Central Banks Around the World
|
|
|
Bank of Canada Officials Fretted Firmer Inflation Could Persist
|
|
|
|
Sweden’s Central Bank Cuts Rate Amid Economic Uncertainty
|
|
|
Sweden’s central bank cut its key policy rate to 2% Wednesday and said there was a small chance of further easing later this year if economic weakness persists and inflation falls further.
|
|
|
Bank Indonesia Stands Pat Amid Uncertainties
|
|
|
|
|
|
Senate Passes Stablecoin Bill in Big Win for Crypto Industry
|
|
|
|
|
|
Photo: Mariam Zuhaib/Associated
|
|
|
|
|
|
The Senate passed the Genius Act, the first bill to put federal guardrails on digital currencies, sets up oversight of stablecoins, a popular crypto asset typically pegged to a government currency such as the U.S. dollar. That peg keeps their price steady, making them attractive to traders looking for a store of value while they buy and sell more volatile cryptocurrencies. Stablecoins can also be used for cross-border payments.
|
|
AIB Group Returns to Private Ownership as Irish State Completes Exit
|
|
|
AIB Group has returned to private ownership after the Irish state fully divested its stake in the lender, marking a significant step as governments across Europe move to unload their crisis-era bailout positions.
|
|
|
|
|
|
|
|
7 a.m.: MBA Weekly Mortgage Applications Survey
8:30 a.m.: New Residential Construction, Housing Starts and Building Permits
8:30 a.m.: Unemployment Insurance Weekly Claims Report, Initial Claims
10 a.m.: Online Help Wanted Index
2 p.m.: Federal Reserve economic projections
2 p.m.: U.S. interest rate decision
4 p.m: Treasury International Capital Data
|
|
Thursday (U.S. financial markets closed for Juneteenth)
|
|
|
7 a.m.: U.K. interest rate decision
|
|
|
|
Hawkish Fed Dot Plot Could Surprise Markets
|
|
|
No rate move is expected at the upcoming FOMC meeting, but a new Summary of Economic Projections could move markets, says John Velis, BNY's Americas macro strategist. BNY thinks the SEP dots will indicate one less cut for 2025 than previously expected. Given market expectations of nearly two full cuts this year, more hawkish dots could upset the market, Velis writes. The Fed has become progressively more cautious on 2025 cuts, he adds, noting that inflation remains on top of mind for most members who've shared their thoughts. Given continued policy uncertainty, the Fed is unlikely to soften its rate view, he says. With only four FOMC meetings left in 2025 after June, it seems increasingly unlikely that there will be time for aggressive easing this year. —Fabiana Negrinochoa
|
|
|
|
-
U.K. inflation cooled a little in May but remained well above the Bank of England’s target, with the rise in oil prices prompted by the conflict between Israel and Iran threatening to keep inflation higher for longer.
-
Japan’s exports fell for the first time in eight months in May, bolstering views that the impact of President Trump’s tariffs could tie the Bank of Japan’s hands on rate hikes.
-
Oil prices remained volatile and major indexes were mixed in Asia as markets continued to digest the unfolding Israel-Iran conflict amid waning hopes for a quick de-escalation.
|
|
|
|
|
WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ’s global team of reporters and editors. This newsletter was compiled by news associate Roshan Fernandez in New York. Send your tips, suggestions and feedback to roshan.fernandez@wsj.com.
|
|
|
|
|
|
