Fed Chair Warsh expected to withhold ‘dot’ from central bank’s interest rate outlook
Federal Reserve presidential candidate Kevin Warsh arrives for a Senate Banking, Housing and Urban Affairs Committee confirmation hearing at the Dirksen building on April 21, 2026.
Tom Williams | Cq-roll Call, Inc. | Getty Images
When the Federal Reserve wraps up its policy meeting on Wednesday, something important may be missing: a point.
The central bank’s Federal Open Market Committee is preparing to release its quarterly update on where individual officials expect interest rates to go this year and into 2028 and beyond. Markets are closely examining the chart, better known as the “dot chart,” for insight into how Fed officials view the economy and its impact on monetary policy.
However, most Fed watchers on Wall Street think new Chairman Kevin Warsh will not participate either because he feels he is not ready, even though he has been in office since May 22, or simply because he does not like the dot plot and its implications for “forward guidance.”
Refusing to post dots would run afoul of the Fed’s nearly 14-year post-financial crisis practices and risk alienating other FOMC officials who prefer the way it helps them communicate with the public. But it could also be an effective first step for a central bank leader promising fundamental changes to how the institution operates.
“It seems to me that he doesn’t want to provide a rate forecast,” said Bill English, the Fed’s former head of monetary affairs and now a professor at Yale. “There may be others on the committee who don’t particularly like the dot plot and are willing to do that.”
‘Fed’s person’
Warsh opposes the dot chart and other forward guidance methods because he believes they limit the Fed’s decision-making abilities.
The dot plot belongs to a larger data set called the Summary of Economic Projections, which also includes the outlook for unemployment, inflation, and gross domestic product. The SEP is updated quarterly and includes the average outlook for each category and is therefore not an official forecast, just the midpoint of the range among FOMC meeting participants.
Bank of America economist Aditya Bhave expected Warsh to not offer a single point, while Goldman Sachs economist David Mericle said in a note: “We assume, but are not sure, that Warsh will not provide a point in light of his past criticism on forward guidance.”
“The Fed is telling the whole world what its points will be, what its forecasts will be,” he said at the time. “Well, Fed people. Then they’re holding on to these forecasts longer than they should. I think if the Fed waits until they’re in a meeting before making a decision, this increased deliberation could keep the central bank from compounding its mistakes. I think these are the big changes that are needed.”
Markets are watching
Still, markets are committed to the dot chart and the rest of the SEP, and if Warsh gets his way, he may have to learn to live without it.
“It never made much sense to me [the SEP] “Sometimes the market has moved because its accuracy has been mediocre at best,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “But this is a way in which the Fed expresses an opinion, and the market tends to act on those views.”
Economist Claudia Sahm warned that if Warsh and others did not join in, it could send the wrong message to markets. Specifically, investors said the news could mean Warsh was trying to “hide his hawkish tendencies” on the committee to combat inflation with higher rates.
“The neutralization of the SEP this week may alleviate some of Warsh’s concerns, but it will almost certainly create new concerns,” wrote Sahm, chief economist at New Century Advisors. “A Fed that appears to be hiding its own controversy may appear complacent about inflation, which is precisely the kind of credibility it cannot afford to lose.”
This meeting is expected to be an interesting test for Warsh’s new communication strategy.
In addition to his views on the dot chart and the SEP, markets will also be watching for any changes to post-meeting statements and whether he will continue to hold press conferences after each meeting.
