A key step in solving the Fed's communication problem may be to eliminate the "dot plot"

Bloomberg columnist Clive Crook wrote that in light of the Fed's failed communication at its just-passed December meeting, the Fed's monetary policy framework review should seriously consider the idea of ​​canceling the "dot plot". The Fed is about to begin a review of "monetary policy strategies, tools and communications". This month's rate cut and investors' reactions to it highlight the need for such a review. Clive Crook believes that one way to solve this problem is to reform the economic forecast summary, including canceling the "dot plot" that predicts future interest rates. The "dot plot" has always been easy to misunderstand, so much so that the Fed has repeatedly insisted that the "dot plot" is not a plan or commitment, but just a forecast. In fact, it is not even a forecast in the usual sense, because it does not express a consensus: it is just a forecast that individual officials think may be "appropriate" based on their different and even potentially incompatible beliefs about what is going to happen. (Jin Shi)