Sure enough, the Fed did!
At 2: 00 a.m. Beijing time on Thursday, the Federal Reserve announced its latest interest rate decision.基Raise the quasi-interest rate by 75 basis pointsRange from 1.50% to 1.75%The rate hike was the biggest since 1994 and the first 75 basis point hike in more than 27 years.
At the same time, the new issue of the dot matrix diagram is released, which is displayed according to the median value of the June lattice diagram.The expected median federal funds rate at the end of 2022, 2023 and 2024 is 3.4%, 3.8% and 3.4%, respectively.The expectations given in March were 1.9%, 2.8%, 2.8%, respectively. The median longer-term federal funds rate is expected to be 2.5%, compared with 2.4% in March. The bitmap also showsThe Fed is expected to cut interest rates in 2024.。
Wait! Seeing this, many investors will begin to wonder: what is a bitmap? What do you think of the bitmap? What does this bitmap imply?
What is a bitmap?
In a nutshell, the Fed lattice map isPredict interest rate increases or cuts in the futureThe map is a kind ofForward-lookingIt's a message.
The Federal Reserve releases a bitmap in the last month of each quarter (that is, March, June, September and December).The bitmap shows Fed members' forecasts for interest rates.
The reason why the Federal Reserve released the lattice map is mainly toStrengthen communication with the marketIn case the market doesn't understand the Fed's message very well.
What do you think of the bitmap?
Lattice diagramThe horizontal axis is the timeline.Fed members usually predict the range of interest rates over the next few years and in the long run.
The vertical axis is the possible range of future interest rates.；
Each solid dot represents a predictorFederal Reserve memberThen its position represents the forecast made by a coalition official for future interest rates.
It is worth noting that each column of the bitmap can have up to 19 dots, that is, 19 Fed members.
There are seven Fed officials, including a Fed chairman, a Fed vice chairman, and up to five Fed governors. In addition, there are the chairman of the New York Fed and 11 local Fed chairmen, such as the chairman of the Chicago Fed and the chairman of the Atlanta Fed.
It should be noted that since the Federal Reserve Board is not always full, we often see less than 19 points in the bitmap.
Most crucially, when the Fed releases a bitmap, it publishes the median interest rate, which represents the Fed's future forward-looking interest rate.
Under the simple popular science, the median is not the average.
The median is to arrange a given group of numbers from small to large or from large to small, with odd numbers taking the middle number and even numbers taking the average of the middle two numbers.
We should pay special attention to the median of these points, followed by the concentration of these points.
In the latest Fed interest rate bitmap for June, you can see that a total of 18 Fed members have forecast interest rates in 2022, with the median expected federal funds rate at 3.4% by the end of 2022.There are eight of them.Fed members (red box below) expect interest rates to range from 3.25% to 3.5% by the end of the year.
Source: United States Federal Reserve system
What does this bitmap imply?
After raising interest rates by 75 basis points this month, the Fed's federal funds rate range is currently 1.50% Mel 1.75%, which indicates that the Fed needs to raise interest rates by another 175 basis points if it rises to 3.25-3.5% by the end of the year.
According to the Wall Street Journal,The Fed hinted that the pace of raising interest rates would be accelerated.. After analyzing the Fed's interest rate path, the Wall Street Journal said:
In March this yearThe Fed expects the median federal funds rate to be 1.9% by the end of 2022 and is now expected to be 3.4%, close to the level long called for by Brad, one of the Fed hawks and chairman of the St. Louis Fed. The pace of raising interest rates is faster than before.
但The pace of raising interest rates next year is expected to slow down.The median expected federal funds rate at the end of 2023 is 3.8%, only 0.4% higher than the median expected at the end of 2022.
The fed is expected to ease monetary policy in 2024 because its median federal funds rate is expected to be 3.4% at the end of 2024, down from 3.8% at the end of 2023.
Source: financial Times, the last two changes in the bitmap
Investors must note that the bitmap is only a point of view and does not represent the real policy direction.On the one hand, not all forecasters have the final say on interest rates; on the other hand, historically, the bitmap is not consistent with real policy.
The bitmap reflects more of the committee members' attitude towards raising interest rates than the actual number of interest rate increases during the year. We can get a glimpse of the change in Fed officials' position on interest rates through two consecutive bitmap.
The discussion on the topic of the Fed's monetary policy will not end soon. Powell will attend hearings in both houses of Congress next week and is expected to be questioned by lawmakers because of the Fed's performance. At that time, it will send more signals about monetary policy, worthy of investors' attention.
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