Given that the Fed almost surely isn’t going to raise rates on Wednesday, it might be tempting to suggest September’s FOMC meeting is a non-event.

If that’s your assessment, I wouldn’t necessarily disagree. You can read my full FOMC preview here, but suffice to say rates will be unchanged and, in my view, the dot plot will preserve the Fed’s optionality when it comes to squeezing in one more hike this year.

The market won’t (or shouldn’t, anyway) be surprised if the Committee does indeed convey an ostensible inclination to raise rates again in 2023. “Ostensible” because it’s not about the actual hike. 25bps isn’t going to make a mechanical difference one way or another. It’s about optics and messaging.

Market pricing for 2024 has firmed up consistent with the Fed’s own view, and everything after that is a total crapshoot, something Jerome Powell reiterates at regular intervals.

So, I wouldn’t be surprised if there are no surprises this week.

That said, it’d be a mistake to write the meeting off as little more than a rote exercise in hapless economic pontification and forecasting. It is that, but it could be more. As BMO’s Ian Lyngen and Ben Jeffery put it, “No hike on Wednesday does not diminish the tradability of the Fed.”

Yields are at or near cycle-highs, and the situation feels like a stalemate on some days. If nothing else, the new dots and Jerome Powell’s presser could be a catalyst for movement in the near-term. Or not. Either way, it’s best to be prepared.

In the interest of not flying blind into the event and, more specifically, to help establish the contours of the always esoteric dot debate, I think it’s worth highlighting a few passages from FOMC previews I perused over the past several days. Below, find a handful of excepts which will hopefully be useful when it comes to the nuance of the SEP-market nexus.

Could the upcoming Fed meeting catalyze material front-end repricing? We think not. First, as widely expected, the Fed is unlikely to alter its policy rate at this meeting, and it is likely to remain ‘data dependent.’ Second, beyond substantially updating the economic projections for this year to be more consistent with the current state of the economy, we fail to see much else in the SEP that could be market-moving. A downgrade in the YE23 median dot could put downward pressure on market pricing for an additional hike versus none by year-end (currently priced with roughly even odds). Beyond this year, however, it is hard to see much movement in the median or mean dots, and even if we did see a surprisingly large upward revision for 2025 and beyond, the impact may be muted. Our previous analysis suggests that the “beta” of 1y and 2y forward interest rates to shifts in the average dot at those respective horizons (YE24, YE 25) is ~0.2 when the gap between market pricing and the Fed dots is small, which means a 25bps increase in the mean would be worth only about 5bps in these forward rates. The meeting will also debut end-2026 forecasts. Even if the gap between market pricing and these dots is large, we have found that, at least historically, large gaps between newly introduced dots and pricing have not moved markets much, perhaps because markets discount the information content in forecasts this far out. Indeed, this forecast might simply reflect convergence to long-run rate projections. On the long-run projections themselves, we note markets have moved substantially beyond the Fed projections (3.73% versus 2.66% mean from the June FOMC plot), so that modest changes here are unlikely to matter much. Of course, large changes could have some market impact, but that would take a fairly sizable — and in our view unlikely — revision, given the rather large gap between the two. — Praveen Korapaty, Goldman

Despite the dot plot not having a particularly satisfying track record in predicting the outlook for policy, one would be remiss not to acknowledge the market-moving potential of the changes to the fed funds projections. With Kugler confirmed by the Senate, there will be an additional dot to consider and we expect hers will err on the dovish side. Our take is that the 2023 dot will remain unchanged with the more realistic move higher being via the 2024 dot. As for the median 2024 fed funds projection that is currently at 4.625%, two dots would need to move to 4.875% to bring the median to that level (our base case assumption). Our expectation to see the spread between the ’23 and ’24 dots narrow to 75bps is predicated on the continued resilience of the economy and consistent with the Committee’s incentive to keep financial conditions sufficiently restrictive as the FOMC transitions to the terminal phase of the cycle. — Ian Lyngen and Ben Jeffery, BMO

While the Fed might be done raising policy rates, policymakers are not ready to close the door to additional rate increases in case the evolution of the data does not meet their expectations. With that as a backdrop, we look for the forward-guidance part of the meeting to keep the odds of an additional rate hike before year-end alive. We expect Powell to remain noncommittal in the post-meeting presser regarding the outlook for rate increases. The chair will only commit to the fact that the Fed has not even considered the idea of cutting rates given the inflation fight is not over despite recent progress. We also look for the Committee to continue to signal via the dot plot that an additional rate increase is more likely than not before the end of the year. However, it will be a very close call. We expect the June dot plot median indicating that four interest rate cuts were the most likely outcome for next year to be pared back in September. In our view, the realization of a lower terminal rate by the hawks in 2023 and of a better than expected GDP growth outlook by the doves is likely to translate into projections for higher interest rates next year (i.e., the economy likely needs less monetary policy support than projected back in June). The reduction of rate cuts for 2024 is also consistent with a message of “higher for longer.” Recent talk of a higher neutral rate after the COVID shock will likely lead to a special focus on the Fed’s projection for the longer run dot. While we expect the Fed’s median and the distribution of longer run dots to remain mostly the same next week (particularly the central tendency), only a couple of dots need to shift higher for the median to increase. Note that uncertainty is high for September; we will get new dots from governor Kugler and perhaps president Schmid (he may support what the staff has been submitting since March). Also note that the St. Louis Fed’s staff may decide to include a projection for the longer run dot (something it hasn’t done under former president Bullard since 2016). — Gennadiy Goldberg and Molly McGown, TD Securities