The Fed Meeting With No Dot Plot

Becca HartwellOkay, so get this. There's a Fed meeting in a couple weeks that basically everybody's gonna ignore. Ignore? Didn't they just hike rates like a month ago? That's the one everyone remembers. September, big headline, rate goes up, everyone panics about their credit card. Right, the one that actually made news. This next one's the opposite. Quiet. Boring on paper. So why do I care? Because quiet doesn't mean simple. Probably, it might actually be the scarier one. Wait, scarier how? This is Money Unlocked. I'm Becca, that's Maya, and this time the Fed's not handing anyone a cheat sheet. No cheat sheet? None. No fresh forecast to read the tea leaves from, just a statement and a press conference. So we're all just guessing? Pretty much everyone is, and we're gonna walk through exactly what to listen for on the twenty-seventh and twenty-eighth, forecast or not. Okay, now I actually wanna know what happened in September first. Sure. Okay, so walk me through the actual number. What did the Fed do in September? They raised the benchmark rate a quarter point. New range is three point seven five to four point zero zero percent. A quarter point doesn't sound like much. It's not the size, it's that it happened at all. CNBC's coverage of the September sixteenth decision called it the first hike since twenty twenty-three. Wait, since twenty twenty-three? That's years of nothing. Years of the Fed sitting on their hands, yeah. And then in one meeting, boom, they move. And everybody agreed on this, or was it a fight in the room? Twelve to nothing. Every single voting member said yes. No dissent at all? Zero. Which, for the Fed, is basically a group hug. Okay, but a unanimous vote after three years of nothing, that tells me they were pretty confident. Think about what it actually takes to get twelve different people, all with their own read on inflation, their own regional pressures, their own theories about the labor market, to land on the exact same vote. That almost never happens cleanly. Right. These are people who probably can't agree on pizza toppings, let alone monetary policy. Exactly. So when you see zero dissents, that's not just everyone showed up, that's the whole committee looking at the same data and landing on the same conclusion. Which either means the case for hiking was obvious or nobody wanted to be the lone dissenting vote on the record. Probably some of both, honestly. But either way, a Twelve Zero vote sends its own message to markets, separate from the rate move itself. It says the committee is aligned, and that matters a lot more once the next meeting doesn't come with a fresh chart to lean on. So the vote count itself was basically a signal, not just the outcome. Noted. I'll start paying attention to vote counts, not just decisions. Please do. It's the kind of detail that tells you how much conviction is actually behind the number. They weren't more than confident. This is the part that matters for October. That same meeting, they also released their Quarterly Projections, the Dot, where each policymaker marks where they think rates are headed. Right, the little scatter chart thing. That chart. And sixteen of eighteen policymakers had their dot pointing toward at least one more hike before the year's out. Sixteen out of eighteen? That's basically everyone in the building nodding the same direction. Pretty much the whole room. Okay, so hang on. If they already told us more hikes are coming, like they put it in writing on a chart, why do I need to care about the next meeting at all? Isn't the answer already given? That's the question, and it's the right one. I have my moments. Because those dots came out in September. They're not a promise. They're a snapshot of what eighteen people thought on one specific day. So the snapshot could be old news by the time October rolls around. Exactly. And normally, you'd get a new snapshot every quarter to check the math against. Normally. Normally. October twenty-seventh and twenty-eighth is not one of those quarters. Wait, so there's no new chart this time? No new chart. No new dots. Nothing. So we're just flying on the September numbers? That's the flip. That's exactly the flip. Right, and that's the part people miss. There's only four meetings a year where you actually get fresh projections. March, June, September, December. That's it. Four out of how many total? Eight. Eight meetings a year. Only half of them come with the dot plot attached. Why split it that way, though? Why not just update the dots every single meeting? Probably because updating a full economic forecast eight times a year would be exhausting and kind of pointless. The underlying data, inflation reports, jobs numbers, that stuff doesn't shift dramatically month to month. Quarterly gives them enough new information to actually justify moving the picture. So the other four meetings are more like check-ins. Same forecast, just deciding whether to act on it? Basically. You get the full presentation four times a year, and in between, it's just the statement and the vote. No new slideshow. Okay, that actually makes the quiet meeting sound less random and more like a deliberate rhythm. It is deliberate, which is exactly why treating October like a non-event is the wrong read. It's not that there's nothing going on, it's that this particular meeting isn't the one where they show their full hand. So September was one of the special ones. It was. Finance Calendar's rundown of this year's meetings confirms that pattern. September gets the full package, projections and all. October doesn't. Wait, wait. So the meeting we just talked about, the hike, that was literally the last time the Fed showed its cards for months? Pretty much. The schedule trackers that logged the September meeting spell it out plainly. That was the projections meeting. The next one on the calendar isn't. Wait, that's... Okay, that's actually kind of a big gap. It is, and the next one on the calendar is October 27th and 28th. That's not that far away. A little over a month, and per that same Finance Calendar breakdown, it's one of the quarters where there's no updated Summary of Economic Projections at all. Statement, press conference, that's the whole show. So no new dots, no new forecast, no new anything. Correct. Yeah. Then how is anybody supposed to know what they're going to do? Like, genuinely, what am I even listening for on October 28th if there's nothing new to read? That is the exact question everybody with money in a savings account should be asking right now. Because normally I just go look at the dots and go, "Oh, 16 of 18 people think this. Cool. Moving on." Right. And you don't get that crutch this time. You get eight or nine paragraphs from Jerome Powell and whatever the statement says, and that's the whole data set. So people are just gonna argue about adjectives? Yeah. Basically, yeah. Every word choice gets treated like it means something. Okay, but somebody has to have an opinion. Wall Street doesn't just shrug for six weeks. Oh, they've got opinions. Way stronger opinions than you'd think for a meeting everybody's calling boring. Wait, how strong? Like traders have basically built a whole betting market around this one meeting because there's no dot plot to lean on. A betting market? And the numbers on it are wild. It's way closer than anyone expected for something everyone assumed was a done deal. Now you have to tell me the actual split. Patience. Becca. Next. Okay, so get this. Right after Warsh wrapped his press conference in September, CME FedWatch showed something jump. Jump how much? Odds on an October hike went to 49%. Wait, from what? That same morning it was sitting at 40%. So just talking moved it nine points? One press conference, nine points. That's wild. What does that even mean for someone who's not watching a trading screen all day? It means the market treated Warsh's actual words as new information, even though the rate itself didn't move that day. Nothing changed except how people interpreted what he said. So the number on my phone didn't move, but the number traders bet on did. Exactly, and that's the whole preview of what October's gonna be like. Except this time, there's no dot plot sitting underneath to check that reaction against. Right. In September, you at least had the dots to say, "Okay, is this reaction reasonable?" In October, you just have the reaction. And it wasn't just October. CME FedWatch also had odds of at least one more hike before year-end sitting at eighty-seven%. Eighty-seven! So almost everybody agreed a hike was coming, they just couldn't agree on which meeting. Exactly. Picture a room of one hundred traders. Eighty-seven of them are nodding along. One of them is still finishing their coffee. Sure. But here's the part that actually matters for us right now, sitting here in October. Go on. Here's the difference. That forty-nine% number didn't sit still. By September twentieth, tracked pricing on CME FedWatch put the odds of another quarter point hike at the October meeting at roughly sixty-five point seven%. Sixty%. Basically a coin-flip with a slight lean towards heads. So flip a coin, and heads means my APR probably goes up again. Pretty much. Great. Love that for my credit card. Right? But wait, who's actually setting that number? Like who's placing these bets? Traders, banks, hedge funds, anyone with money riding on where rates land. It's not one person's guess. It's thousands of positions getting priced in real time. So the professionals, the people whose entire job is reading the Fed- Are split almost right down the middle. That's kind of amazing when you think about it. These are people with Bloomberg terminals and economics degrees, and they're at 59, 60%. That's not confidence. That's a shrug with a number attached. And here's the thing about a number like 59.7%. It's not a prediction so much as a snapshot of disagreement. Half the desk thinks the Fed's done for now, half thinks they're not, and that number just tells you how the room is currently leaning. So if I see that percentage move around between now and the 27th, that's not the Fed doing anything new. That's just traders arguing with each other in public. Exactly. The Fed hasn't said a word yet. This is all just people repricing their bets on the same handful of data points we already have. Which makes the actual meeting almost anticlimactic in a weird way. Like the argument's already happening, and the meeting just settles it. That's a good way to put it, and that's exactly why the statement is going to get read like scripture on October 28th. When professionals can't agree, every adjective in that release becomes a clue. Every word gets weighed. Every single one. Which means when we come back, we're gonna walk through exactly what to listen for in that language. Okay, so if there's no new dot plot, what actually moves the market on October 28th? It's just words. Right. Just words, but traders read those words like a court transcript. The creator brief on this literally spells it out. With no updated projections to lean on, every phrase in that statement gets over-read. Over-read how? Give me an example. Say the Fed drops the word gradual from how it describes future hikes. That's it. That's the whole tell. No chart, no number, just one adjective missing. One word disappears, and the market loses its mind? Basically. Or if Chair Powell in the press conference spends more time on the labor market than inflation, that shift in emphasis is the signal this time, not a spreadsheet. So we're not listening for a number. We're listening for which sentence got longer. Exactly. Watch how they talk about inflation cooling. Watch how they talk about jobs. That's the whole read this round. Here's my worry, though. Most people assume the Fed telegraphs every meeting the same way. Big meeting, small meeting, doesn't matter, right? That's the mistake. People expect a scoreboard every time. And then October rolls around, feels totally quiet and- And it still moves markets, and they get blindsided because they weren't watching for phrasing. They were waiting for a chart that isn't coming. Okay. But honestly, Maya, I'm not trading bonds. Why should I care if Powell swaps one adjective for another? Because that adjective swap is exactly what decides whether your credit card's APR ticks up again next month. Wait, seriously? Dead serious. Banks price your card rate, your savings account yield, even car loan rates off where they think the Fed is headed. If the market reads more hikes coming into that statement, your APR moves before the Fed ever raises anything. So the wording is the preview of my next statement balance. Basically, your whole wallet is downstream of one press conference nobody expected to matter. Okay, that got real personal, real fast. It always is. Okay, so walk me through my actual statement then. Not theory, my statement. Your credit card first. Almost every card out there has a variable APR, and that APR is built on the prime rate. Which is what exactly? It's the rate banks charge their best customers, and it moves in lockstep with whatever the Fed's benchmark range is doing. Fed hikes up, prime rate hikes up days later, your card statement follows. So if October ends quiet, my card's fine. For now. But say the Fed hikes again before December—I move my APR twice this year, not once. Exactly. People think the September hike was the whole story for their card. It's not. Every hike after it stacks on top. Ugh. What about the savings side? Please tell me something good happens to me. Your high yield savings account actually likes hikes. Banks compete for deposits, so when the Fed's range goes up, savings yields tend to follow. Wait, so I want them to hike? If you're a saver, kind of, yeah. If you're carrying a balance, absolutely not. And the car payment? Only if you're shopping for a new loan. Auto loan rates get priced off where the Fed's sitting when you sign. So someone financing a car in November is borrowing into whatever October just decided. So three totally different accounts, same meeting. Same meeting, three bills. That's why I keep saying a quiet-sounding meeting isn't a skippable one. Give me the real scenario, though. Say I've got a balance sitting on a card right now. If the Fed hikes again before December, expect your APR to move again, not just because of October, because of whatever comes after it too. It compounds through the year. Cool. Love that for me. I know. But at least now you know why your statement changes even on months you weren't paying attention. Right, because most people wait for some official Fed press release to hit their inbox before they even check their own rate. And that's the mistake, waiting for a headline instead of just looking at your own account. The rate change shows up on your statement before any article explains it. So don't wait for the news to tell you. Check it yourself. That's the move. Okay, so here's the mistake people make with this stuff. Waiting for the news alert? Exactly. They're sitting there waiting for some big headline that says, "Fed raises rates," like a text alert's gonna show up on their phone. And meanwhile? Meanwhile, the September hike may have already crawled onto their card statement, and they haven't noticed. Because nobody reads the fine print on page four. Nobody. And the mistake isn't laziness. It's just the change doesn't announce itself. It's a number that moves quietly. So you're saying don't wait for permission to check your own account. Right. Don't wait for CNBC to tell you your APR moved. Groundbreaking advice, Becca. I contain multitudes. Okay, but give people something to actually do here. One thing. This week, not next month, this week, pull up your credit card app and look at your actual APR. And your savings account yield. Both. Two minutes, tops. Why now specifically, though? Because you want a clean before picture before the Fed makes its next move at the end of the month. Otherwise, every rate change just blurs together, and you can't tell what caused what. So it's basically taking a photo of your own numbers before the weather changes. I like that. Steal it. I will. Point is, when the decision drops, you'll already know your starting number instead of squinting at your statement trying to remember what it used to be. That's genuinely the whole ask. Check your APR, check your yield, write them down somewhere. Done. Five minutes of homework against a statement most people won't even read. Okay, so that's the move. Get your numbers now. Watch what changes when the decision lands. Simple as that. All right, Becca, take us home. Okay, so that's the homework, plain and simple. Before October twenty-seventh and twenty-eighth roll around, pull up your card APR. And your savings yield. Both. Two minutes, two tabs, done. Two minutes. I timed it once. Of course you did. Okay, so if you liked today, share the show. Send it to the one friend who still thinks the Fed is Boring. They're wrong. They're so wrong. And hit follow wherever you're listening so you don't miss what actually happens on decision day. Rate it too if you're feeling generous. Very generous. I'm just gonna go check my own APR right now, honestly. Go. Do it. That's the whole point. See you next time. This has been Money Unlocked. Thanks for listening.