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There’s plenty of room for disappointment in Wednesday’s Dot Plot projections from the Federal Reserve.

Economists surveyed by Bloomberg were still expecting the Federal Reserve to cut interest rates three or more times in 2024 with the first cut coming in June. (To be more precise, the survey found that a majority expect three or more cuts in 2024 while more than a third expect two or fewer cuts in 2024.)

The survey was conducted from March 8 through March 13.

Why do I highlight the dates? Because the first of this week’s disappointedly hot inflation reports, the Consumer Price Index, was released on March 12. So some economists could have included those results in their response to the survey. The other hot inflation report, the Producer Price Index, was released on March 14. So no economist in the survey could have included that in response to the survey.

The Federal Reserve, of course, will have seen all this date when it issues its quartly update to its economic projections, the Dot Plot, on Wednesday March 20.

Why is that important? Because it sets up the possibility of a market surprise on March 20 if a substantial number of investors and traders are in agreement with the economists and the Fed’s Dot Plot projections show only two cuts in 2024.

On Friday, March 15, the Fed Funds Futures market was a bit more pessimistic about a June interest rate cut than the economists in the Bloomberg survey. The odds of a cut, as calculated by the CME FedWatch Tool from prices in the Fed Funds Futures market, were just 58.8%. Odds of no cut had climbed to 41.2% from just 26.6% a week earlier.

Odds of a cut (or more than one by the time of the meeting) at the July 30 Fed meeting were at 91.5%.

But notice something. If the Fed doesn’t cut until the June 12 meeting, then the central bank will have to shift into a very aggressive pattern of cuts for the rest of 2024 to make three cuts for the year. After the June meeting, the Fed meets only four more times in 2024. So Jerome Powell and company would have to cut interest rates at the June, September, and December meetings to reach three cuts in 2024. (Those are the only Fed meetings with another update of the Dot Plot economic projections and on recent pattern I think it’s likely that the central bank would cut only at a Dot Plot meeting.) That’s a pretty aggressive schedule for a bank that is right now talking loudly and repeatedly about being patient and waiting on the data.

In other words, whether the Fed says so or not on Wednesday or in the Wednesday Dot Plot, I think the calendar is strongly in favor of just two cuts and not three in 2024.

I think the market will be able to handle that degree of disappointment without selling off but it would certainly be a negative backdrop from the rest of 2024.

I’d say that there’s almost no chance that the Fed will cut on Wednesday. But that doesn’t mean the March 20 meeting is without drama.