Bloomberg columnist Clive Crook pointed out that the Federal Reserve's 'dot plot' has become a source of market confusion, suggesting that it be eliminated during monetary policy reviews in favor of focusing on real-time data analysis to improve policy communication and reduce economic impact. (Background: The U.S. November PCE index fell well below expectations! Is inflation under control? Federal Reserve officials expect a significant drop in interest rates next year.) (Additional context: Taiwan's central bank has frozen rates for three consecutive times; 'Yang Jinlong has not called for the eighth wave of housing control,' but the 7.5 wave has stealthily struck.) Yesterday (30th), Bloomberg columnist Clive Crook suggested that the Federal Reserve should consider eliminating the 'dot plot,' a tool originally meant to convey policy signals, which has instead become a source of market confusion. He believes that focusing on real-time data rather than future forecasts will make policies more adaptive and better aligned with actual needs. Federal Reserve communication errors The Federal Reserve's December rate dot plot In the December policy meeting, the Federal Reserve lowered interest rates by 25 basis points to 4.25%-4.5% and simultaneously adjusted inflation and economic growth forecasts. However, this policy combination was interpreted by the market as a 'hawkish pivot,' leading to a decline in the stock market. Bloomberg commentary pointed out that the way the Federal Reserve communicates exacerbates the challenges of policy implementation. Crook believes that the market's misinterpretation of Federal Reserve policy partly stems from the economic forecast summary and 'dot plot' it released, which failed to clearly convey policy intentions and instead caused market reactions to be misaligned due to discrepancies between data updates and actual policies. Taylor Rule and policy deviation Based on the Taylor Rule, the Federal Reserve should have maintained interest rates at the December meeting. However, the market's strong expectations for rate cuts led the Federal Reserve to implement a rate cut to avoid the market interpreting a lack of cuts as a tightening of policy. Crook pointed out that this 'passive accommodation' of the market could make future policy adjustments more difficult. The Taylor Rule is one of the well-known simple monetary policy rules proposed by John Taylor in 1993, which adjusts the nominal neutral interest rate based on the inflation gap and output gap to estimate the appropriate level of the federal funds rate, serving as a reference for the Federal Reserve's future rate decisions. The problem with the 'dot plot' Crook mentioned that the 'dot plot' is not a policy consensus, but rather a rate trend drawn by officials based on personal expectations, which the market often interprets as a plan or commitment, further confusing policy messages. He suggested that the Federal Reserve should eliminate the 'dot plot' and shift its focus to interpreting real-time data rather than outdated future forecasts. Crook emphasized: The Federal Reserve should pay more attention to the immediate implications of data, avoiding a disconnect from actual conditions due to over-reliance on forecasting tools. Especially in policy reviews, if they can significantly reform or even abandon the 'dot plot,' it would help reduce market misunderstandings of policy and enhance economic stability. Related reports The U.S. November PCE index fell well below expectations! Is inflation under control? Federal Reserve officials expect a significant drop in interest rates next year. Taiwan's central bank has frozen rates for three consecutive times; 'Yang Jinlong has not called for the eighth wave of housing control,' but the 7.5 wave has stealthily struck. The Federal Reserve's megaphone: The era of ultra-low interest rates is over, and Trump holds the key to rate cuts in 2025. Bloomberg criticizes the Federal Reserve: 'The dot plot is the biggest source of market chaos; it is suggested to be eliminated to reduce economic impact.' This article was first published in BlockTempo (BlockTempo - the most influential blockchain news media).