The FOMC also released their latest round of forecasts and expectations. The interesting part of the release for me is the FOMC members expectations on what they think the Fed Funds rate should be at year end. While it doesn't tell you much about when asset purchases may end, it does give you good insight into when they believe the economy will have enough "exit velocity" to be able to cope with higher interest rates and also how high interest rates will be to be considered "normal".
The chart above shows how expectations of the Fed Funds rate at year end has evolved over the past 12 or so months. Whats interesting to me is that even in outer years and the long run, expectations have, on average, been revised lower by more members. Some of this is due to a change in the composition of members, but even the hawks seem to be getting less hawkish each quarter.
A key signal for me that the FOMC may be about to change tack would be a small change in this chart above. For example, if the numbers of those supporting higher rates earlier starts to rise, I think that is a sign that a meaningful change has occurred on the stance of policy.
