Ben chabot(@chabot_ben):Does the Market believe the FOMC dot plot? Fed Fund's futures imply many more rate increases than the FOMC's SEP projections. In a new post on the blog, I break down what is driving the gap between market implied rates and FOMC communications. Blog: https://t.co/s6Yy4avAr7 The difference is due to an abnormally high risk-premium. There is a large academic literature showing this premium varies over time and should overstate expected rate increases in the current economic climate. That said, the market prices carry important information about the risks of policy errors and should neither be ignored or rewarded by the FOMC.

2026.09.18 16:12

Does the Market believe the FOMC dot plot? Fed Fund's futures imply many more rate increases than the FOMC's SEP projections. In a new post on the blog, I break down what is driving the gap between market implied rates and FOMC communications. Blog: The difference is due to an abnormally high risk-premium. There is a large academic literature showing this premium varies over time and should overstate expected rate increases in the current economic climate. That said, the market prices carry important information about the risks of policy errors and should neither be ignored or rewarded by the FOMC.