The dot plot is the chart in the Federal Reserve's Summary of Economic Projections that shows each FOMC participant's anonymous projection for the appropriate midpoint of the federal funds target range at year-end horizons and over the longer run. Each dot is one policymaker; the median is read as the rate path signal.
How it works
Released quarterly with the SEP since 2012, the dot plot plots one anonymous dot per participant (currently up to 19) for the appropriate year-end fed funds rate across the projection horizon plus the longer-run neutral rate. Markets focus on the median dot as the central tendency, but the dispersion of dots conveys committee disagreement. The dots are projections, not commitments, and carry no individual attribution.
Why it matters now
As the Fed navigates the 2025-2026 cutting cycle amid sticky services inflation and tariff pass-through, the dispersion of dots — and recurring debate over whether the dot plot should survive at all — has become a focal point, with critics arguing it overstates precision and muddies forward guidance.
Example
In the September 2024 SEP, the median 2024 dot implied a year-end fed funds midpoint of roughly 4.4%, signalling about 50bp of further cuts after the 50bp September move, while the longer-run dot sat near 2.9% — its gradual upward drift from the post-GFC 2.5% reflecting a higher perceived neutral rate.
Frequently asked
- What is the Fed dot plot?
- The dot plot is a chart in the Fed's quarterly Summary of Economic Projections showing each FOMC participant's anonymous projection for the year-end federal funds rate. Introduced in January 2012, it plots one dot per participant (currently up to 19) across the projection horizon plus a longer-run neutral estimate. The median dot is read as the committee's central rate-path signal.
- How do you read the dot plot?
- Read the dot plot by locating the median dot at each horizon, which markets treat as the committee's central tendency for the year-end fed funds rate. The vertical spread of dots conveys disagreement, while the longer-run cluster signals the perceived neutral rate. Dots are anonymous and unattributed, so individual hawkishness cannot be tied to named officials.
- How is the dot plot different from forward guidance?
- The dot plot is a set of conditional projections, while forward guidance
Glossary · forward guidance
Forward guidance is a central bank's communication about the likely future path of policy rates, used to shape market expectations and steer financial conditions today. It comes in calendar-based (date-contingent), state-based (outcome-contingent on inflation or unemployment thresholds), or qualitative open-ended forms.
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Glossary · carry
Carry is the income earned (or paid) for holding a position over time, independent of price change — the coupon, yield, or interest-rate differential captured while waiting. Positive carry pays you to hold; negative carry costs you. It is the return that accrues if nothing moves.
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- Why does the dot plot matter for markets?
- The dot plot matters because it anchors expectations for the rate path beyond the next meeting, moving the front end of the curve when the median shifts. A single dot crossing a threshold can reprice futures, as in the hawkish June 2021 SEP. Critics argue it overstates precision and can muddy the policy message.
- Is the dot plot a promise of future rates?
- No, the dot plot is not a promise of future rates. Each dot is an individual participant's projection of the appropriate policy rate conditional on their own economic forecast, not a committee commitment. Actual outcomes have repeatedly diverged from prior dots, notably in 2019 when cuts replaced the projected hikes shown in the 2018 plots.