Researchers from Federal Reserve Board Describe Findings in Investment (Hawkish or Dovish? Inferring Intended Monetary Policy From the Fed’s Dot Plot): Investment

2026 APR 03 (NewsRx) -- By a News Reporter-Staff News Editor at Economics Daily Report -- Current study results on Investment have been published. According to news reporting originating from Washington, District of Columbia, by NewsRx correspondents, research stated, “We develop a forward-guidance Taylor rule with time-varying coefficients, estimated from the Federal Reserve’s Summary of Economic Projections (SEP) median forecasts of the federal funds rate, inflation, and unemployment between 2012 and 2025. Our model allows policy inertia, inflation responsiveness, and output sensitivity to evolve as stochastic processes, while accounting for the effective lower bound with a shadow-rate specification.”

Our news editors obtained a quote from the research from Federal Reserve Board, “The results show that the Fed’s intended policy after the pandemic became more persistent and markedly more responsive to inflation, particularly during the 2021-22 tightening cycle, while responsiveness to the output gap remained stable. Compared with constant-coefficient or non-inertial alternatives, our specification tracks SEP rate projections more accurately, especially at turning points, and the estimated coefficients help explain bond excess returns, indicating that markets interpret the evolving rule embedded in the dot plot.”

According to the news editors, the research concluded: “We conclude that the SEP functions as a dynamic communication device, signaling shifts in the Fed’s intended policy stance in real time.”

This research has been peer-reviewed.

For more information on this research see: Hawkish or Dovish? Inferring Intended Monetary Policy From the Fed’s Dot Plot. Journal of Economic Dynamics & Control, 2026;185. Journal of Economic Dynamics & Control can be contacted at: Elsevier, Radarweg 29, 1043 Nx Amsterdam, Netherlands. (Elsevier - www.elsevier.com; Journal of Economic Dynamics & Control - http://www.journals.elsevier.com/journal-of-economic-dynamics-and-control/)

The news editors report that additional information may be obtained by contacting Manuel Gonzalez-Astudillo, Federal Reserve Board, Washington, DC 20551, United States.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1016/j.jedc.2026.105294. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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