Triangulating the dots — Fed's Evans comments suggest he may be in three-hike camp
Published: March 20, 2017 at 10:51 a.m. ET
Steve Goldstein
Market isn't totally convinced the Fed will hike three times in 2017
Charles Evans, president of the U.S. Federal Reserve Bank of Chicago
Interpreting which Federal Reserve official represents which "dot" on the central bank's closely watched dot plot of interest rate forecasts is something of a parlor game.
But comments made by Chicago Fed President Charles Evans, typically one of the more dovish members at the central bank, may suggest that he is part of the majority who expect three interest rates in 2017.
"I think the economy is on a pretty good course right now," Evans told Fox Business.
Asked directly if the market was right to expect three interest rates this year, he replied: "I think three is entirely possible. As I gain more confidence in the outlook, I could support three total this year." He even said four would be a possibility.
There are three Fed officials below the three-hike line: two who say the range between 75 basis points and 1% was appropriate, and one who said another quarter point was appropriate.
Minneapolis Fed President Neel Kashkari is likely one of the low dots given his dissent from the Fed's interest rate hike last month.
There's a possibility the identity of one of the other two low dots could be Gov. Daniel Tarullo, who is retiring in April. Seeing as he gets a vote in every meeting, his retirement could make a slight upward shift in the trajectory of the voting members.
The market isn't totally convinced the Fed will hike three times this year. Derived from fed fund futures prices, there's a 10% probability the central bank won't make any more hikes this year, and a 31% chance the central bank will hike just one more time in 2017, according to the CME Group's FedWatch tool.
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Steven Goldstein is based in London and responsible for MarketWatch's coverage of financial markets in Europe, with a particular focus on global macro and commodities. Previously, he was Washington bureau chief, directing MarketWatch's economic, political and regulatory coverage. Follow Steve on Twitter: @MKTWgoldstein.