NEW YORK (TheStreet) -- When it comes to the Federal Reserve these days, it's smarter to listen to the words than to watch the "dots."
That's the unavoidable conclusion after Fed Chairwoman Janet Yellen's latest performance, which coupled dovish language about how fast rates may rise once the central bank begins to move with a series of economic projections from Open Market Committee members that point to much-faster increases.
The language has been a much better guide to the Fed's action than the individual rate forecasts by each Fed member -- shown as "dots" on a chart -- for a long time now.
And the lower-for-longer stance on rates that Fed leaders such as Yellen and Boston Federal Reserve Bank President Eric Rosengren have articulated has also been a much better match for the economic data, in the U.S. and elsewhere. So if you're trying to make investment decisions based on what the Fed may do, dump the dots and watch the words.
"In spite of the fact that there is some progress on (moving toward full employment), the committee wants to see some further progress before feeling that it will be appropriate to raise rates," Yellen said at her press conference on Wednesday.
To watch the dots, you'd conclude there's a good chance that the near-zero Fed funds rate could hit 1% by the end of this year, which Wednesday's decision to keep rates between 0 and 0.25% all but rules out. Most members forecast that the rate would hit 1.5% or more by the end of next year, which would require a sustained, consistent push to add a quarter of a point at every meeting beginning in September. And three of the 16 forecasters said it will be above 2.5%, even pushing 3%.