Fra BNP Paribas:
We expect the median projected path of rates to be unchanged in the June SEP. A significant departure from the Fed’s most recent medium-term outlook (March) is unlikely in June, so the “dots” should not communicate drastically different policy intentions.
The year-end 2016 “dots” could fall due to the passage of time. The long-run “dot” could decrease by 25bp to 3.00%.
We expect few changes in tomorrow’s “dot-plot” and for the median projected path of rates to be unchanged. However, the passage of time since March means some dots this year may edge down. Table 1 summarizes the changes we expect in year-end 2016 Fed funds projections based on our estimate of the mapping of “dots” to individuals in March.
Fed Governor Tarullo and Chicago Fed President Evans will probably lower their 2016 dots, preferring only 1 hike before year-end rather than 2. Dallas Fed President Kaplan is another possible candidate for a dovish shift. Atlanta Fed President Lockhart and Philadelphia Fed President Harker are likely to recommend only 2 hikes in June after recommending 3 in March
. St. Louis Fed President Bullard, Cleveland Fed President Mester, and Kansas City Fed President George will probably shift into the 3 hike camp after having recommended 4 hikes in March. Richmond Fed President Lacker could still view 4 hikes as appropriate policy
