Finance Insolvency

Here’s where interest rates could be in three years

This article was sourced from Market Watch. Article by Greg Robb.

The Federal Reserve on Monday fleshed out how its new fan charts might look when the central bank adds them to their economic projections starting next month.

Analysts said the descriptive charts will be used to stress the uncertainty of its quarterly economic forecasts.

A Fed staff paper includes a chart from last September’s Fed meeting that shows how the fan chart would have worked. It shows that Fed officials believed there was a 70% chance that the funds rate could be anywhere in a range of slightly negative to over 5% by the end of 2019.

The chart is simply “a visual representation” of Fed Chair Janet Yellen’s oft-stated comment that the central bank’s monetary policy is not on a pre-set course, said Jim O’Sullivan, chief U.S. economist at High Frequency Economics.

“They are afraid people are not interpreting the Fed’s dot-plot. It is all very conditional. It says given this economic outlook, there is what you should expect on interest rates.”

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