Someone within the Federal Reserve is out of step with everyone else.
Of the 17 participants in the monetary policy committee meeting that wrapped up Wednesday, one unnamed member has a dramatically different perception about where interest rates should go than everyone else.
The difference, a small but unusual wrinkle in the Fed’s publications put out Wednesday, was made clear in the “dot plot” the Fed releases once a quarter, showing the projections from all 17 participants for future interest rates in the form of dots.
The dot plot, which doesn’t identify whose forecast is whose, shows that every member of the Fed expects at least one rate hike in 2016, to 0.5 percent to 0.75 percent.
But then one member apparently sees things very differently. He or she forecasts that the Fed will take no further action in 2017 or 2018, leaving the interest rate target steady at below 1 percent. That member’s dot remains well below those of the other participants, who believe that interest rates will rise steadily:
Even more mysterious, one dot is missing from the projection for the longer run.
A footnote explains that the individual also left out long-run projections for economic growth, inflation and unemployment. Generally, all participants fill out forecasts for all the variables.
It’s impossible to tell who might be responsible, whether it’s one of the five members of the Board of Governors in Washington or one of the 12 regional bank presidents.
One guess would be that the lower dot belongs to Federal Reserve Bank of Cleveland Charles Evans, who suggested this month that the Fed might rule out rate hikes until inflation rises. That statement set him apart from others in terms of his willingness to keep rates low to boost employment.
But even then, left unexplained is why he would leave out long-run forecasts.
The Federal Reserve did not immediately respond to a request for comment.
